John Whittingdale: What steps the Government is taking to prevent the recruitment of young people to dissident republican groups.

David Simpson: As we prepare to hear the Chancellor's Budget today, will the Prime Minister detail for us what sort of an impact scrapping the Barnett formula would have on the least well off regions of the United Kingdom, including, of course, Northern Ireland? Will he resolve that those areas such as Northern Ireland will not be penalised in the allocation of funding for essential services in the Budget?

David Cameron: Perhaps on another occasion we can talk about some of your chief advisers and what they have been up to. It is about time this Prime Minister realised that as well as bringing the country to the brink of financial bankruptcy, he has brought his party to moral bankruptcy. The truth is—we are going to look at the facts—that this is the deepest and most painful recession since the war. On this day—a day when the Chancellor is going to have to explain that unemployment is rising faster than ever before, that the number of young people not in education, employment and training is higher than ever before, that Britain is borrowing more than ever before, and that the recession is as deep as I said—will the Prime Minister finally admit that he did not abolish boom and bust?

Gordon Brown: We believe that as a result of the action that we have taken, hundreds of thousands of jobs that could have been lost are not being lost. I ask the right hon. Gentleman to wait to hear from the Chancellor, who will give him a very precise figure when he gives his Budget a few minutes from now. As for action on employment, when the right hon. Gentleman lists the various things that we have done he is making our point. This does not happen by accident—it does not happen by chance; it is because we have taken action to create jobs that more people have not lost their jobs, as has happened in other countries.

Alistair Darling: Today's Budget will continue to help people through this global recession, and prepare Britain for the opportunities of the future. First, there will be help now to get people back into work quickly, and to support businesses and home owners facing problems. Secondly, there will be measures to support investment in growth and green industries of the future while the recovery takes hold, and to ensure that our public finances are sustainable. We will protect investment in schools, hospitals and other key public services, and we will work to rebuild our financial services. Taken together, the measures in this Budget will build on the strengths of the British economy and its people and speed the recovery, providing jobs and spreading prosperity. In all of these decisions, we have been guided by our core values of fairness and opportunity, and our determination to invest and grow our way out of recession.
	Today's Budget will take Britain through the most serious global economic turmoil for over 60 years. The impact is being felt in every continent, every country and every community. When the world economy was plunged into a deep crisis in the 1930s, the response, both nationally and internationally, was too little and too late. That failure to act turned a serious downturn into a prolonged depression. We will not repeat those mistakes again. This time, we and other countries have worked to avoid them. Across the globe, we have seen decisive action by national Governments, and internationally, too. This action, taken promptly and decisively, gives us good grounds for confidence.
	Today's Budget builds on the substantial help for people and businesses that I announced in the pre-Budget report last November. It builds on the steps that we have taken to recapitalise and restore confidence in our financial institutions, and it builds on the outcome of the G20 summit in London this month, when the world's leading economies came together to agree an unprecedented co-ordinated action to speed global recovery. The action already taken here and internationally, and the measures that I will announce today, mean that I expect the economy to start growing again towards the end of this year. I am also confident that as the global economy recovers to double in size over the next 20 years, Britain can and will be a world leader. This Budget will help make sure that we seize this opportunity.
	As I told the House in November, we and other countries have been battling against a succession of shocks that have hit the world economy. At the end of 2007, problems in the international mortgage markets began to put a damaging squeeze on credit. In early 2008, we also saw dramatic volatility in many commodities prices, adding to uncertainty and putting pressure on growth. Last autumn, the dramatic failure of one of the top investment banks in America— Lehman Brothers—shattered already fragile confidence and brought the international financial system to its knees.
	Since then, an extraordinary international financial crisis has fed into the wider economy, causing a steep and widespread world recession. A crisis that started in the developed economies has spread to emerging and developing countries too. Industrial production has fallen and unemployment is rising, by 5 million in the United States alone. In the past few months, world trade fell, and while our exports are down 14 per cent., exports in Germany are down 21 per cent., in China 26 per cent., and in Japan 45 per cent. So for the first time since the second world war, the world economy is expected to contract this year.
	In the past few months we have seen considerable economic uncertainty, and that has fully justified the action we, and other countries, have taken to support businesses and people. Since the autumn, we have put the banks on a stronger footing, cleaning up their balance sheets and helping to boost bank lending. As a result, banks will be able to lend billions of pounds more this year and next to homebuyers and businesses. Getting credit flowing again is the essential precondition for economic recovery.
	In the pre-Budget report, I announced a range of measures to help the country through the recession, putting £20 billion back into the economy. That help is coming through now, from an income tax cut, and a VAT reduction that will continue until December. There is increased support for pensioners, as well as investment in vital public services and accelerated capital projects, which is protecting thousands of jobs in this country. Because of the reforms we have made to the welfare system since 1997, that comes on top of extra help when families need it most.
	I fully understand the anxiety behind calls to support those whose wages have fallen. This is exactly the support that our flexible system can offer, and is already offering. As shorter working weeks or irregular patterns reduce wages, those receiving tax credits can see an automatic increase to compensate for the loss of income. In March alone, for example, 355,000 families were receiving on average £35 a week more to support them, through tax credits—all the more reason why we need to keep tax credits and not scrap them. This demonstrates how our welfare system automatically helps people when they need it most.
	Fiscal support has been complemented, too, with sharp reductions in interest rates by central banks right across the world. The Bank of England interest rate is now down to half a per cent., the lowest it has ever been. That has reduced the cost of mortgages and loans. The average saving, since October, for the 4½ million families with tracker mortgages, is over £230 a month. And we have now given the Bank of England new means to support the flow of credit and put money into the economy. Inflation has come down, which means that people's income will go further.
	Taken together, the total support that we have provided to the UK economy is expected to protect up to half a million jobs. Other Governments across the world have been doing the same. The total amount of fiscal support across the G20 will amount to over $5 trillion.
	There has also been unprecedented co-ordinated action at an international level. The G20 group of economies came together, first in November and then in London earlier this month, to fight this global recession. We agreed to take whatever action was necessary to deliver the International Monetary Fund forecast of global growth of over 2 per cent. by the end of next year. In total, we agreed over $1 trillion of additional support for the world economy.
	There are no quick fixes; there is no overnight solution—but because of the progress we have made, here and internationally, we can begin to restore confidence, save jobs, and bring the world economy more quickly out of recession. Of course, we must make sure we deliver on these agreements, starting at the meeting of Finance Ministers in Washington this week. I want the next meeting of European Union Finance Ministers to be focused on rebuilding growth in Europe, based on the foundations laid by the G20 in London. But we also need a clear path to recovery here—both fiscally and by investing to build Britain's future.
	The UK went into this global recession with employment at an all-time high, and inflation, public debt and interest rates at low levels. But no country can insulate itself from this worldwide downturn. The position here, as in every country, deteriorated in the autumn. In the last few months, world trade fell at the sharpest rate since 1945, and, as an open economy, we are the world's sixth biggest exporter of goods and the second largest exporter of services, and we are affected by the collapse in demand in other countries. The unexpected severity of the recession has led the IMF to downgrade its own forecasts for the world economy three times since October. We, as well as other countries as diverse as Japan and France, India and the US, have reduced our growth estimates.
	The United Kingdom economy contracted by 1.6 per cent in the last quarter of 2008. For the first quarter of this year, I expect the economy will again contract by a similar amount. And my forecast for GDP growth for the year as a whole will be minus 3½ per cent.—in line with other independent forecasts. But because of our underlying strength, and the measures we are taking domestically and internationally, I expect to see growth resume towards the end of the year. The IMF forecasts published today confirm the problems that all countries will face this year. But they also show that the British economy will suffer less than Germany, less than Japan, less than Italy and less than the euro area as a whole this year. The British economy is diverse, it is flexible and it is resilient, which is why I believe we can be confident in recovery.
	Next year, because of the pick-up in world demand, the continuing benefit of lower prices and the substantial recovery measures being put in place, I am forecasting growth of 1¼ per cent. in 2010. In future, the sources of our growth will be more varied—and we need to ensure that we play to our country's strengths. It will increasingly come from an expansion in investment by businesses in the industries of the future, such as low-carbon, advanced manufacturing and communications. These industries, together, are as important to the British economy as the financial services sector. That is why it has been so important that, for example, we have increased investment in Britain's science base by 88 per cent. in real terms over the last 10 years. Growth will also be driven by the opportunities to export as the global economy doubles in size in the next two decades.
	From 2011, I am forecasting that the economy will continue to recover, with growth of 3½ per cent. from then on. To account for the impact of the global shock, I have further adjusted trend output—the productive potential of the economy. But in future years, the economy will recover towards a trend rate of growth of 2¾ per cent. Inflation is expected to continue coming down sharply, reaching 1 per cent by the end of this year. I am writing to the Governor of the Bank of England, in the usual way, to confirm that the inflation target remains unchanged at 2 per cent. Retail prices index inflation is forecast to remain negative, falling to minus 3 per cent. by September, before moving back to zero next year.
	The deepening global recession has had an impact on the public finances here and in every country across the world, and in this Budget, I will set out steps to ensure that they are on a sustainable path. And owing to the measures that I will announce today, the current deficit is expected to halve within four years. But before I turn to that, I want to set out the additional help we will give to people and businesses to get through the recession—and build towards recovery.
	We know from previous recessions that people's greatest fears are the loss of their job and their family home. All over the world, as the economy slows, unemployment is rising. In the UK, the claimant count increased in February by 137,000. Today's figures show that in March it went up by 74,000—making the total claimant unemployment rate 4.5 per cent. It is not in any Government's power to prevent all job losses, and, even when the recovery is under way, it will take time for unemployment to start falling. But Governments must give people targeted help to find new jobs as quickly as possible and, where necessary, to gain the new skills which will allow them to do this. This is not just morally the right thing to do, but economically essential. All the evidence shows that the longer people are out of work, the more difficult it becomes for them to re-enter the labour market. So today I will announce steps to ensure that short-term job loss does not turn into a lifetime on benefits.
	The core of the Government's approach is the Jobcentre Plus network; its help has almost halved the average time that people spend out of work compared with previous recessions. Even in the tough economic conditions since November, it has helped over a million people move back into new employment. I am determined that this support can continue to be given to people who lose their jobs. In November, I increased resources for the Jobcentre Plus network and the new deal by £1.3 billion. I can announce today an additional £1.7 billion worth of funding, so that everyone can receive the high-level and high-quality support to which they are entitled.
	Most people, even now, continue to find work within a matter of weeks, but we need to step up help to those who have greater difficulty in getting back into the labour market. So there will be additional support, through the flexible new deal, for people who have been out of work for 12 months. I am also determined that we do even more to protect young people from the damaging impact of long-term unemployment. The alternative is a return to the days when a whole generation of young people found themselves abandoned to a future on the scrap heap. We will not repeat that mistake.
	So I want to offer a guarantee. From January, everyone under the age of 25 who has been out of work for 12 months will be offered a job or a place in training. Those in work will receive a wage; those in training will receive additional money on top of their benefits. To provide these extra opportunities, we are working with employers to create or support as many as 250,000 jobs. That will include delivering local services and traineeships in social care and other high-demand sectors, as well as jobs for people of all ages in particularly badly hit communities.
	I also want to do more to help people gain the crucial skills that will be needed in the future. So, as part of my guarantee to young people, I will spend over £260 million of new money for training and subsidies, to help them get the skills or experience that they need in sectors with strong future demand. We will also provide extra investment to ensure that we deliver on our guarantee for every 16 and 17-year-old who wants to stay in education or training, to make sure that they can do so. To deliver that, for the next two years I am providing a further £250 million this year and £400 million in 2010-11. That will allow an additional 54,000 places in sixth forms and further education colleges for students in the next academic year. For this and other measures, there will be consequential provisions, where appropriate, for Scotland, Wales and Northern Ireland.
	I will shortly set out long-term measures for housing and for businesses to help build the recovery, but first I want to set out how we can offer more support now in these areas. One of the biggest fears when people lose their jobs is that they and their families will lose their homes, and I want to do more to reduce the number of repossessions. Last year, I increased and extended the support for mortgage interest scheme, which covers mortgage interest payments when people lose their jobs. Today I can announce that I will maintain the higher level of support for a further six months to help home owners as long as they look for a new job. That is in addition to the scheme to help people stay in their homes if their income falls.
	The housing market is also being held back by a lack of mortgage credit, and the Government have already taken action to encourage an increase in mortgage lending; this year the major UK banks will increase the availability of mortgages by around £20 billion. To build on this, today I can announce the introduction, following state aid approval, of the scheme to guarantee securities backed by mortgages. That will help ease the flow of mortgage finance.
	The recession and the credit crunch have made it much harder for people to take their first step on the housing ladder. This is not just difficult for those involved, but also undermines the entire housing market. So to help, I have decided to extend the stamp duty holiday on properties sold for less than £175,000 until the end of the year. Sixty per cent. of residential properties will continue to be exempt, which will encourage modest and middle-income home buyers. I can also announce a further £80 million extension to HomeBuy Direct, the Government shared equity mortgage scheme, which has already received interest from over 32,000 people since last September. Altogether, this is additional support for those who lose their jobs and new help for people to get on to the housing ladder.
	In November I announced a series of measures to help businesses now. Over 100,000 businesses, which employ well over half a million people, have taken up the option to defer their tax bills, and I intend to continue this help. Some 800,000 smaller companies will benefit from the delay in the increase in corporation tax. Last month I announced that we would allow companies to spread out the payments of this year's uprating of business rates, but today I want to do more to help firms with cash-flow problems. Many viable companies face temporary difficulties because of the shortage of credit, so today I am extending the help which allows loss-making companies to reclaim taxes on profits made in the last three years. This help, which will lead on average to repayments worth £4,000 each year, will now be available for two years until November 2010, and well over 100,000 businesses will have their full current losses entirely wiped out. Today I can also announce additional targeted support for companies' cash flow, with a top-up trade credit insurance scheme, which will match private sector trade credit insurance provision if insurers reduce their cover to businesses operating in the United Kingdom.
	I also want to help the UK's automotive industry, which has been one of Britain's success stories over the last decade. But the loss of consumer confidence and credit crunch has led to a sharp fall in vehicle sales around the world. In order to help the car industry and retail trade, I can announce that we will implement a scrappage scheme next month. It will provide motorists with a £2,000 discount on new cars bought when they trade in cars over 10 years old. It will be a time-limited scheme until March 2010. My right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform will announce further details shortly.
	We have made our choice to help those who have lost their jobs to find work quickly and, if needed, to learn skills. We are acting decisively to prevent a new generation of young people from becoming a lost generation. We are offering real support to home owners, and to businesses, through this unprecedented economic crisis. We could have decided to do nothing—but we chose to act, because that is the right thing to do. By doing so, we have not just protected people but will also reduce the length and the severity of this recession, lessening the impact on our public finances in the medium term.
	I now turn to the public finances and the action that I will take to put them on a sustainable footing in the medium and long term. As I told the House in November, tax revenues were falling. The financial sector, which provided 27 per cent. of corporate tax revenues, was already badly hit then. But since then, with the recession spreading across almost every sector, the wider tax take has also come down sharply. Corporation tax and income tax revenues have fallen. The problems in the housing market have meant a dramatic reduction in stamp duty. In the UK, tax as a share of GDP is 1.2 percentage points lower now than it was a year ago. Here and across the world, tax revenues are down, and it will take some years before they come back up. At the same time, our reformed welfare state is rightly providing support to families, but of course it does come at an added cost to the Exchequer. Many countries have also intervened to strengthen their banking system, as we have. My public finances forecasts today include a provisional estimate for the potential cost of this, which totals 3½ per cent. of our GDP.
	Around the world, fiscal deficits and Government debt have been rising sharply to levels not seen since the second world war. This is a response to an unprecedented financial crisis and a deep and widespread global recession. Allowing borrowing to rise—protecting services, helping people and businesses—is the right thing to do. The alternative—to take money out of the economy now, as some have suggested—would damage key public services, create more unemployment, lengthen the downturn and lead, in the end, to higher, not lower, debt. This Government, as well as others, have learned from the historic economic mistakes of the inter-war period that countries cannot deflate their way out of recession.
	Taken together, my Budget measures today represent a fiscal easing of half a per cent. of GDP this year, followed by a tightening of 0.8 per cent. of GDP each year until 2013-14. I believe this is a sensible pathway to sustainable public finances. It will mean, as I have said, that the budget deficit will be halved in the next four years. At this stage, when there is so much uncertainty, to do so more quickly would prevent us from helping people now, choke off recovery, and stop us investing in the future.
	Many countries, as a result of their action to support the economy, have seen higher deficits. In the United States, for example, the Congressional Budget Office expects the deficit to be 13 per cent. of GDP in 2009, 10 per cent. in 2010, and even in 2019, to be above 5 per cent. Our own figures for public sector net borrowing will be £175 billion this year, or some 12 per cent. of GDP. From 2010, as the economy starts to recover, and the measures announced in November and today take effect, borrowing will fall to £173 billion, then £140 billion, £118 billion, and then £97 billion. As a share of GDP, our borrowing will be 11.9 per cent. of GDP next year, and then, as we move towards balance, 9.1 per cent. in 2011-12, then 7.2 per cent., and then 5.5 per cent. in 2013-14.
	This downturn will inevitably mean sharp increases in national debt relative to GDP. UK net debt, which includes the cost of stabilising the banking system, will, as a share of GDP, increase from 59 per cent. this year, to 68 per cent. next, then 74 per cent. in 2011-12, 78 per cent., and then 79 per cent. in 2013-14. It will stabilise and then begin to fall from 2015-16. In countries across the world, because of this economic crisis, it will take far longer for deficits to come back into balance. But because of the steps we are taking, I expect the underlying current budget to come back into balance two years later.
	We need to help people now. We need to maintain key public services now. We need to invest in the future, but we also need to make sure that we maintain public finances on a sustainable footing. Indeed, this is the best way to drive up economic growth, which, in turn, is the best way to bring down borrowing and rebalance the public finances. We must to this within a time scale that does not damage the recovery. This will require tough decisions, but I am determined that they will be fair decisions.
	It cannot be fair that those who should pay tax are allowed to avoid it. Over the last decade, we have taken a number of measures that have reduced tax evasion and avoidance—on average, reducing avoidance by over £1 billion a year. I intend to build on this today. We have identified loopholes and schemes which, when closed, will result in £1 billion of extra revenue over the next three years.
	In this Budget, there will be new measures to help pensioners and savers on middle and modest incomes. It is important that everyone is encouraged to save for their retirement, and we will continue to support them to do so. But I intend to address an anomaly which sees a tiny proportion at the top taking a large slice of the help we give people to help to save. It is difficult to justify how a quarter of all the money the country spends on pensions tax relief goes, as now, to the top 1½ per cent of earners. So from April 2011, I will restrict pension tax relief for those with incomes over £150,000 so that it is gradually tapered to the same 20 per cent. that the majority of people receive. We will consult on its implementation. I am introducing measures from today to prevent forestalling, but again only those with incomes over £150,000 will be affected.
	I am not proposing to increase taxes on income for this year. However, as the economy recovers and wages start to grow again, it is right that we take additional steps. I believe that it is fair that those who have gained the most should contribute more. Only those with incomes over £100,000 a year—or 2 per cent. of the population—will be affected. In November, I announced a new rate of income tax of 45 per cent. on incomes above £150,000—the top 1 per cent. of taxpayers. In order to help pay for additional support for people now and to invest in the future, I have decided that the new rate will be 50 per cent., and will come in from April next year—a year earlier.
	In November, I also announced that I was reducing personal allowances for the very highest earners with incomes over £100,000. These allowances are worth twice as much as those of basic rate taxpayers. I have now decided to withdraw fully the benefit of that allowance for those with incomes over £100,000 from next April. These measures are necessary to build our recovery and secure our country's economic future.
	Along with other measures, including for landfill, company cars and gaming, I can also announce the following. I will continue to monitor oil prices, but I expect that fuel duty will increase by 2p per litre in September, and then by 1p a litre above indexation each April for the next four years. Alcohol duties will go up by 2 per cent. from midnight tonight, and there will be an increase in tobacco duty of 2 per cent. from 6 o'clock this evening. Taken together, these measures will raise over £6 billion by 2012, to secure our economic future and to provide help for people now when they need it most.
	The importance of our public services, on which we all depend, becomes even clearer in these difficult times. We have made our choice to continue investing in our public services, which underpin the health and strength of our nation now and in the future. In the past 10 years, that investment has seen an extra 40,000 doctors, 41,000 teachers and over 70,000 nurses. But just as every family are looking closely at their own budget to ensure that they get the best value for money, so too should the Government.
	Since 2004, the Government have identified and made £26.5 billion in efficiency savings while continuing to invest to improve schools, hospitals and other public services. In November, I announced plans to find an extra £5 billion of efficiency savings in 2010-11, on top of the £30 billion in this spending review period. Some have argued that we should cut public services immediately, rather than invest and grow our way out of the recession. I believe that would be the wrong thing to do. I can confirm that we are able to secure these savings that year while increasing investment, as planned, for local health services by over 5 per cent. and for schools by over 4 per cent.
	Yesterday, we published the reports of the five independent reviews I set up last year. They have identified extra efficiencies from 2011 that rise to a further £9 billion of additional savings a year by 2013-14. They include efficiencies in public sector back-office functions and IT, improved procurement and better collaboration, and innovation at a local level. This will allow us to protect front-line services, while keeping current spending growth, in real terms, at an average of 0.7 per cent a year from 2011-12 onwards.
	Capital spending is equally important to the future of our country. Over the past five years, this investment has transformed services. There are 61 major hospital schemes, 140 new schools and improved transport links including the modernisation of the west coast main line. It is essential to help create jobs, boost the recovery and deliver economic success in the long term. I intend that capital investment will continue at historically high levels to 2012, as we prepare for the Olympic games in Britain. After that, public sector net investment will be at 1¼ per cent. of GDP by 2013-14, twice as high as it was in 1997. Indeed, the efficiency savings we are making will help us direct more money to continue to support investment that everyone in this country depends on. We have set ourselves a central goal of realising up to £16 billion of property and other asset sales in the three years from 2011-12, with the proceeds raised being used for new capital investment.
	As a result of the measures I have announced today, I can afford to make further investment in the future of this country. These funds will be invested now, to help ensure we seize the opportunities that will come from a world economy that is expected to double in size. I have already announced today £3 billion-worth of extra support to help people find work quickly, with a new guarantee for young people. There will also be £1 billion to help us combat climate change, by supporting low-carbon industries and green collar jobs. There is close to £1 billion to help home owners, meet future housing supply and allow the construction industry to recover quickly, and there is £2.5 billion for business, to encourage investment in the industries and high-paid, high-skilled jobs of the future—sectors such as advanced manufacturing, the creative industries and the low-carbon technologies: all essential if we are to prepare for the future.
	A successful economy needs a strong financial sector. We do not want to throw away the many advantages that come from our position as a world centre for finance. I intend that we retain that position. Hundreds of thousands of jobs across the United Kingdom depend on it. We need to build trust in the banking system and harness the strengths of the financial services sector for the benefit of society. Crucial to that is financial regulation. I will publish shortly a Treasury paper with my recommendations for wide-ranging reform. It will propose action to reform corporate governance and remuneration at banks to avoid undue risk taking; to improve the regulation of capital and liquidity, so banks do not over-extend themselves; to increase transparency to achieve a single set of accounting rules so that we can see the risks that banks are taking; as well as to regulate all important institutions including hedge funds. It will also propose action to reduce the impact of the failure of financial firms. It will protect and support consumers and improve efficiency and competition in the financial markets as well as strengthening regulators' powers. All these steps will, in turn, complement the agreement that we reached in London earlier this month to restore trust in the global financial system.
	Strengthening the banking system is crucial to the recovery and to the economy, but the strength of our economy and the health of our society also depend on meeting the long-term demand for housing in this country. I have two measures that will help achieve that. First, we want to work with the industry to help tackle the restraints that house builders say could prevent them from acting now to increase housing supply. This will give construction firms more certainty and help them meet housing demand more effectively. Secondly, lack of finance now is affecting house builders and preventing the long-term investment that we need. So today I can announce £500 million of extra financial support. This will kick-start building on housing projects that have been stalled because of the credit crunch, and will deliver thousands of new homes. As part of that support, we are providing £100 million for local authorities to build new energy-efficient housing.
	I have one further announcement to make about housing for one particular group. The whole country and the House are united in admiration for the courage and professionalism of our armed forces, but I want to ensure that that admiration is reflected in the quality of their accommodation, so I am bringing forward £50 million to accelerate the modernisation programme for that housing to ensure that this happens.
	Let me turn next to the targeted help for business, which will help build on the strengths of our economy. A sustained and strong recovery depends on companies of all sizes making the most of the new global opportunities that await them. A more competitive exchange rate will help exporters, but it is also vital to our recovery that Britain and other countries remain open to free trade. It is essential that the Export Credits Guarantee Department gives businesses the support that they need, and I intend to report back shortly on how the support can be improved.
	I have a number of proposals to encourage investment. There is, at the moment, less incentive to explore and extract oil from the North sea because of prevailing prices. So I am bringing forward incentives to encourage smaller fields to be brought into production, which could lead to an extra 2 billion barrels of oil and gas that would otherwise remain under the North sea. The incentives will also remove fiscal barriers, so that the North sea can become a hub for energy of the future—gas storage, carbon capture and offshore wind. I want to say more about that shortly.
	I want other industries to invest, too. Businesses already benefit significantly from the annual £50,000 investment allowance, which was announced two years ago. I want to go further to promote investment now. So for this year, I will double the main capital allowance rate to 40 per cent. That will encourage firms to bring forward investment, in particular those companies in the growth sectors that will deliver the rewarding jobs of the future. It will mean enhanced tax relief to support investment of up to £50 billion this year. That includes £10 billion of investment in the vital communications sector.
	It is vital as well to ensure that the entire country and economy benefit from the digital age. So I am allocating extra funding for digital investment to help extend the broadband network to almost every community. That will allow us to deliver the vision set out in the "Digital Britain" report—making sure that everyone can benefit from this communications revolution and creating thousands of skilled jobs.
	Next, Government can and should do more to buttress the strength and capability that we need for our economic future. On Monday, the Government published a new industrial framework, the aim of which was to remove the barriers holding back innovative and fast-growing companies and to help markets work better.
	To support that industrial activity and strategy, I can announce the setting up of a £750 million investment fund to help the country seize the opportunities ahead. The new fund will provide financial support, focusing on emerging technologies and regionally important sectors in, for example, advanced manufacturing, digital and biotechnology. It will encourage exports, support inward investment, promote research and development and harness commercially our world-class science base. It will complement the two new city region pilots in Manchester and Leeds, which will also have a major role in promoting economic investment.
	Green technology will be one of the great growth sectors in the world economy in the next few years. In preparing for the future, Britain's economic recovery must be sustainable and protect the environment. These efforts also have the potential to create thousands of high-tech businesses and hundreds of thousands of high-skilled jobs.
	Climate change is one of the biggest challenges our world faces—and we in Britain are setting the lead. We are ahead of every other major developed country in progress against our Kyoto targets. Today, I am presenting the world's first ever carbon budget, which commits this country to cutting its carbon emissions by 34 per cent. by 2020. Those budgets will give industry the certainty needed to develop and use low-carbon technology—cutting emissions and creating new businesses and jobs. They are a landmark step, which point the way to the vital decisions that must be made at the Copenhagen climate change summit later this year.
	Saving energy is the easiest and cheapest way to cut carbon emissions—and it also saves people and business money. Over the past 12 months, we have helped around 1 million homes improve central heating or insulation. Today, I can announce £435 million of extra support to develop energy efficiency measures for homes, businesses and public buildings.
	As well as saving energy, we need cleaner energy. We must build on Britain's status as a world leader in offshore power generation. However, I am aware that the credit squeeze is holding back major offshore wind projects. I want to lift the barriers—through £525 million of new financial support over the next two years for offshore wind, funded through the renewables obligation. The potential is enormous and I am confident that this will lead to major projects getting the go-ahead quickly, providing enough electricity to meet the needs of up to 3 million households. We need to support all forms of renewable energy. I can also announce that renewable and other energy projects in the UK stand to benefit from up to £4 billion of new capital from the European Investment Bank.
	Coal, oil and gas will continue to be major sources of energy for the foreseeable future. Clean technologies, such as carbon capture and storage, are vital to ensure that we can produce power from those sources without damaging the environment. I am determined that this country's research and technological expertise is used to make us world leaders in this area as well. So I can announce that a new funding mechanism will be used to finance at least two, and up to four demonstration projects. The new generation of power plants could be even more efficient by using the heat produced in the generation of power. To encourage the use of combined heat and power technology, I will exempt those projects from the climate change levy from 2013, which will bring forward over £2.5 billion in investment.
	I can also announce that, through £405 million of new funding, we will encourage low-carbon energy and advanced green manufacturing in Britain to drive up the application of new technology as well as to invest in small-scale projects. In particular, that will help us strengthen the supply chain right across these sectors and build on the expertise that we have in this country.
	On the back of the discovery of oil and gas in the North sea, we became a world leader in every aspect of oil technology and industry. I am determined that we will replicate this success across the renewable energy and low carbon sectors. The steps that we are taking today will help make sure that we meet this ambition. They will also protect our planet and ensure the country's economic future.
	The measures that I have announced today underline our vision of a confident and successful Britain. They offer support for people when they need it, but also hope for the future. They put in place the vital building blocks for recovery and the economic long-term success that we need. Everything that we have done—whether supporting families now, maintaining investment in our public services and putting the nation's finances on a stable path—is based on our values of fairness and opportunity. Even at this time of global difficulty, we are determined to continue building a fairer society.
	In November, I provided help for families and pensioners. Today, I want to do more. Twenty-two million people on middle incomes have seen their income tax go down this month. There is help for millions of families, too—with the child tax credit up by £75 this month and the increase in child benefit paid early. Today I can announce additional targeted measures.
	The Government are determined to eradicate child poverty, so, first, I can announce that, from April next year, the child element of the child tax credit will increase by £20. Secondly, children with disabilities need extra help to make the most of their potential, so we will add an extra £100 a year to their child trust fund. For those with severe disabilities, it will be an extra £200 each year. Thirdly, I can announce an increase in statutory redundancy pay from £350 to £380 a week.
	I have one further measure, which will help a small number of valued people in this country. Increasingly, grandparents play a big role in family life in looking after grandchildren. To reflect that, we will, for the first time, ensure that those caring responsibilities of grandparents of working age will count towards their entitlement to the basic state pension.
	I want also to announce further help for pensioners and savers. Earlier this month, pensioners on modest incomes got the biggest ever increase in pension credit while the basic state pension increased by £4.55 a week. I want to reaffirm today our commitment to increasing the basic state pension by at least 2.5 per cent. So if retail prices index inflation this September is below zero, as we expect, pensioners can be confident that their pensions will rise in real terms.
	Last year, because of the steep increase in energy prices, I brought in a one-off increase in the winter fuel allowance. Energy prices are now expected to come down, but to help pensioners even more, I intend to maintain the allowance at the higher level for another year. That is worth £250 for the over-60s and £400 for the over-80s.
	The fall in interest rates has been a welcome benefit to the economy and to millions of home owners whose mortgage costs have come down, but this has also reduced the amount of interest paid out on savings, and has particularly hit pensioners who rely on this extra money. There are more than 5½ million pensioner households in this country who have modest savings of less than £10,000, and I want to help them. For over a decade, the capital disregard on pension credit has been at £6,000 or below. It means that savings above that level reduce the amount of help that households get through the pension credit. I believe that it is now time to increase those limits, which will help compensate modest-income pensioners with limited savings. So from November of this year, the limit will be raised to £10,000. That will benefit more than 500,000 pensioners on modest incomes, who will gain by an average of £4 a week.
	I have one other announcement that I want to make on savings. Tax-free individual savings accounts have been a great success. Eighteen million people have taken them out and have saved in them almost £290 billion. Since they were introduced 10 years ago, the annual limit has been increased only once and it now stands at £7,200. I want to go further, so to help savers on the 10th anniversary of ISAs, I intend to increase the total annual limits to £10,200, of which £5,100 can be saved in cash. The new limit will be introduced this year for all those aged 50 or over and will come in next year for everyone else.
	Even in these difficult times, there is fair and targeted help for grandparents and pensioners and to tackle child poverty, encouraging people to save now and in the future. Every country has been hit by this global recession, but we have confidence in Britain's future and in this country's strength. You can grow your way out of recession; you cannot cut your way out of it. We have made our choice—to help people now, to build Britain's future. I commend this Budget to the House.

David Cameron: Today everyone can see what an utter mess this Labour Government and this Labour Prime Minister have made of the British economy: the fastest rise in unemployment in our history, the worst recession since world war two and the worst peacetime public finances ever known. As of today, any claim that they have ever made to economic competence is dead, over, finished.
	This Chancellor has just told us that he will be doubling the national debt. He is planning to borrow £348 billion over the next two years. That is more, over just two years, than every previous Government put together—not just every Government since world war two and not even every Government since world war one, but every Government since the Bank of England was first founded more than 300 years ago. This Prime Minister has certainly got himself in the history books. He has written a whole chapter in red ink: Labour's decade of debt.
	The Chancellor rattled through those figures for borrowing, so let me read them slowly. The Government are set to borrow £175 billion this year, followed by £173 billion, and then £140 billion— [ Interruption ]—he says he said that; he swallowed it—and then £118 billion. That means that over a four-year period, Britain will now be borrowing £606 billion. They talk about child poverty, but with debt like that, our children will be in poverty for decades. It is a staggering amount and the price will be paid not by the incompetent Ministers who put us into this mess, but by families and businesses up and down our country. They will never forgive the people who have done this. Britain simply cannot afford another five years of Labour.
	Even those figures are massaged. On page 204 of the Red Book, the Government are assuming that consumer demand will bounce back to pre-boom levels by 2011. That is what they are forecasting, and that is why they forecast the debt coming down so quickly. That would not be a U-shaped recovery; it would be a trampoline recovery.
	What is the Chancellor's excuse for those dreadful borrowing figures? He just told us that this is a world recession. Of course other countries are suffering, but there is not one single other major country in the world in a position as bad as the United Kingdom. [Hon. Members: "Rubbish!"] They say, "Rubbish!", but there is not one country with a bigger budget deficit in any major economy. Why is that the case? Because the Government did not fix the roof when the sun was shining.
	It is no good the Chancellor's pretending that the international factors were some sort of surprise. He knew that there was a world recession when he made those utterly useless forecasts in the November pre-Budget report last year. We now know that what he told us was a complete work of fiction. Let us take just one figure, the growth forecast. He told us that it would be minus 1 per cent., but he has had to downgrade it to minus 3.5 per cent. That is one of the biggest downgrades in the history of forecasting.
	The figures are so bad that the Prime Minister and the Chancellor have had to do a spectacular U-turn. For years they have lectured us about how departing from the Government spending programmes means swingeing cuts. Minister after Minister has stood at that Dispatch Box and said that any attempt to depart from the Government's rate of growth of spending means being savage or inhuman, and now they are doing it themselves.  [ Interruption. ] That is right—that is what Labour Members were all cheering in that rather pathetic cheer at the end of the Budget speech. The Government have just announced more than £10 billion of cuts over two years. For years, that was the Prime Minister's great dividing line, but he is suddenly on the wrong side of it. After today, no one will ever believe a word that they say about spending cuts ever again.
	But the Budget still does not do enough to get the public finances under control. In two words, it is completely inadequate. Instead of putting up taxes in 2011, why does the Chancellor not get to grips with spending now and next year? Look at the consequences of failing to deal with spending. Look at the tax rises that he has announced today. Of course, the Government claim that it is just the rich who will pay—and by the way, he has just broken a manifesto promise not to put up the top rate of tax, but people expect that from this lot anyway—but look at the other taxes.
	Look at the tax on beer. That is going to hit every drinker in every pub. Look at the tax on petrol. The Government are reintroducing the fuel duty exercise— [ Interruption ]—escalator. That is going to hit everyone who has to drive to work. Those people are not rich; they have to work hard, and they are going to pay the price for Labour's failure. Those are not taxes for the few; they are taxes for the many, introduced by this Labour Prime Minister.
	But what stands out most about today's Budget is how every single argument and every prediction that the Government have told us about has turned out to be wrong. They told us that the recession would be less severe than in the 1990s. I have lost count of the times that the Prime Minister has told me that over that Dispatch Box, but perhaps he would like to look at page 200 of the Red Book, which states:
	"the current downturn is forecast to be much deeper than that of the early 1990s".
	He is condemned by his own Red Book. This is worse than the '70s and it is worse than the '80s or the '90s. This is not just boom and bust; it is the worst boom and bust ever.
	Then the Government told us, in that November Budget report, that the recession would be over by the end of June. I know that the Chancellor does not want to remember what he said in November, but he said that growth would start early as a direct result of the cut in VAT. So by the Government's own criteria, the VAT cut has failed. The money was wasted and our debt is higher as a result.
	What about the last big argument—the one that the Prime Minister tried to get off the ground before the G20? Britain, we were told, was heading for another great fiscal stimulus. Well, where is it? Are we missing something? There is no fiscal stimulus here; there is a couple of extra billion added to what has already been announced. That is less than the cut in next year's capital budget. This is not a stimulus; it is a delayed tax rise and a delayed spending cut. The Chancellor could not provide a proper stimulus because he had run out of money. The Prime Minister sits there shaking his head, but he is the only person in Britain who does not realise how ridiculous he looked wandering around the world telling Governments everywhere else to open their cheque books and start spending, when the Governor of the Bank of England had taken the Prime Minister's cheque book and torn it up in public.
	Of course we need schemes that will really help the unemployed and that will help British businesses, large and small. We have been calling for a proper credit guarantee scheme for six months. Before we get carried away with the schemes that have been announced today, I think we are entitled to ask what happened to the ones announced last year. The internship scheme: not working. The asset-backed security scheme: not working, but, incidentally, reannounced today. And what about HomeBuy Direct? The Chancellor told us today that it was to be given another £80 million. What a treat for HomeBuy Direct! There is only one problem: we asked some parliamentary questions and found out that, by 25 March, not a single sale had been made through the existing scheme.
	What about the home owners' mortgage support scheme? Peter Mandelson was meant to be in charge of that one, and he knows a thing or two about getting a good mortgage, so you would think that he might have succeeded. It was the centrepiece of the Queen's Speech last year but now, four months later, the Government have just announced it all over again. And still not a single home owner has received a single penny under the scheme. What a disgrace! What a callow farce from this Government! The Chancellor also told us about his scrappage scheme. Let me see if I can get this right. We take something that is 10 years old; it is completely clapped out, it pumps out hot air, pollutes its surroundings and is absolutely ripe for the knacker's yard. What a brilliant idea!
	Where does all this leave the Prime Minister's big argument—the one he based his whole premiership on—that he would always be prudent with the nation's finances? Barely a year ago, he described a deficit of 8 per cent. as being completely out of control. So how would he describe a deficit today of 11.9 per cent.? That is more than Denis Healey borrowed when he was forced to go to the International Monetary Fund.
	Let me turn to the IMF, as the Chancellor might well have to. I would love to read out a list of countries that the IMF says are heading for a larger deficit than Britain's next year. I can't; there aren't any. Russia, South Africa, Turkey and Argentina are all heading for deficits half the size of ours. Is it any wonder that, in a not-very-noticed announcement, Ministers chose this time to announce—some of you might have missed this—that they wanted to remove the stigma on countries going to the IMF. One Minister actually said that the IMF should be seen as something to celebrate—I am not making this up, I promise—and a bit like
	"getting wellbeing care or even like going to a spa to recuperate".
	What planet are these people on? When are they going to realise that they cannot spin their way out of this one?
	This Budget was a missed opportunity. We need to move from an economy of borrow and spend to an economy of save and invest. The Government talked about the disregard, but why not give proper help in the tax system for people who save? Where was the plan to regulate the banks and to regulate credit properly? Is it not time to end the tripartite system and to restore the Bank of England to its proper role of regulating debt in the economy?
	On the fiscal side, the Chancellor has scrapped his fiscal rules and his spending plans, but he has put absolutely nothing in their place. That is why we need spending restraint now and an office for budget responsibility for the future. I have to say to the Chancellor and the Prime Minister that no one will believe that the Government are going to sort out the public finances when the Prime Minister says that they are going to make a serious start only in 2011. We all saw what they are doing today: introducing a few clever, political taxes on the rich before the election while saving up any real tax increases until 2011. But look what we have got between now and then: another Queen's Speech, another pre-Budget report and another Budget. The Prime Minister sits there in his bunker talking about all the brave things that he is going to do in 2011. Is there no one left to tell him that he has to hold an election between now and then? They just do not get it; they cannot see what is actually wrong. He will never bring in the changes required because he does not accept that the economic model that he has run for 12 years, based on Government debt, consumer debt and housing debt, is fundamentally bust. This Prime Minister can never be the future because he does not understand what went wrong in the past.
	The fundamental truth is that all Labour Governments run out of money. The last Labour Government gave us the winter of discontent; this Labour Government have given us the decade of debt. The last Labour Government left the dead unburied; this one leaves the debts unpaid. They sit there, running out of money, running out of moral authority and running out of time. We have to ask ourselves: what on earth is the point of another 14 months of this Government of the living dead? If they do not have the courage to deal with the debt and take the difficult decisions, why not make way for the team that can?

Nicholas Clegg: The economic crisis is unprecedented in many ways—its scale, its speed, its reach—so people are looking for something bold and distinctive from this Government. Let us think back to the great Budgets of our history. The people's Budget of 1909 introduced the first pension and the first social insurance. Labour's post-war Budgets built a new nation from the rubble of war. What made those Budgets great was their ambition, and their coherent vision for a different future. That is what we needed today, in the aftermath of this generation's disaster. The worst of times demand the best of Budgets.
	So what did we get today? We got a mishmash of recycled announcements from a Government skilled in raising false hopes but incompetent in delivering practical help. The Chancellor had a choice: he could have used this Budget to get practical help to the millions of people struggling in this recession. He could have given a people's Budget for the 21st century. Instead, we got just another politician's Budget, desperately rushing around for half-baked ideas to save the skin of this failing Government. This Budget is a political supermarket sweep, a trolley full of random promises, but without even a hint of a plan or of any real likelihood that the promises will be put into practice.
	The growth predictions in this Budget stoke up false hopes. The Chancellor says that the economy will grow by 1.25 per cent. next year, and by 3.5 per cent. by 2011. He says that £15 billion can be shaved from public spending without cancelling a single Whitehall project. Given the lamentable failure of this Government to get their own predictions right, people will be asking what kind of fantasy world they are living in these days. If they get things wrong again—particularly the growth predictions—even greater pain will be necessary to get the Government accounts in order in future years.
	The economic crash is not the result of a few minor mistakes, and patchwork repairs will not fix it. We need to do things fundamentally differently, and that will need to start with a different kind of banking system, although that barely warranted a mention in today's Budget. Just because the subject is off the front pages today, that does not mean that the problems in our banks have been solved. Businesses are still not getting loans. Banks are still in a mess. The problems have to be sorted: we need a banking system in which no bank is too big to fail, in which high street banks take no unnecessary risks with other people's money, and in which risky casino-type investment banking is cut loose to fail when things go wrong.
	The biggest disappointment in this Budget is its failure to sort out Britain's unfair tax system, and its failure to put money into people's pockets to help them to make it through this recession. Britain's taxes are still too heavy on those who can least afford them, and too easy to avoid for those who know how to do so. That is how this Government—and, I think, the Conservatives—seem to want it. We are now the only party that will do things differently, and get practical help, through lower taxes, to people who are really struggling.
	This week, we explained that, if we took aggressive action to clamp down on all the loopholes and exemptions that benefit the richest people and the biggest businesses, it would be possible—even in a recession—to cut most earners' income tax bills by £700 by raising the income tax threshold to £10,000 for everyone.
	The Government have finally accepted today, having spent years telling us it was not possible, that one of the most unfair loopholes—the doubling of the tax relief on pension contributions from the highest earners, compared to people on ordinary incomes—should be changed, but they have only tinkered with the loophole today by removing the benefit only from the tiny minority of people earning more than £150,000. Like the Chancellor's other tokenistic measures applying to the highest earners, it will raise very little money—only £200 million, according to his own Red Book—while leaving in place the really big loopholes such as the lower 18 per cent. tax on capital gains. That, in effect, serves as a massive subsidy for the very rich when we should be doing everything we can to cut taxes for people who really need help. Our proposals would ensure that 4 million of the lowest paid would no longer have to pay any income tax at all. Our proposals would put fairness and transparency back into this Government's woefully unfair and complex tax system, and I urge the Government, even at this late stage, to take up our ideas.
	It is not too late to sort out Labour's failed fiscal stimulus either. There should have been proposals in this Budget to end the pointless VAT cut and replace it with a stimulus package that actually works. Billions have already been poured down the drain, but if the Chancellor stopped the VAT cut now, he would still have £8.5 billion to spend better elsewhere. Just imagine what could be done with that money. We could create thousands of real jobs, as well as lay the foundations for a different, greener economy. We could insulate 2 million homes and every school and hospital in the country, which cannot be done with the piffling amount announced today. We could build new council houses, upgrade public transport with new train carriages and re-open railway lines and railway stations. For every minute that goes by, £22,000 is wasted on the VAT cut, and every minute that goes by, someone else in Britain loses their job. It is not too late to turn things around. We could cancel the VAT cut, put the money into green jobs, and have a quicker recovery and a stronger country.
	This mishmash Budget includes a litany of missed opportunities. I welcome the Chancellor's announcements on pensions, but will he confirm that he has still not addressed the fact that many pensioners receive pension credits on the absurd assumption that they are making a 10 per cent. return on their savings?
	I have lost count of the number of Government announcements on housing—we have had another one today—yet fewer new affordable homes are being built than ever, young people still cannot get a foot on the housing ladder and the Government persist with their deeply misguided policy of subsidising people to take on new debt in a falling housing market.
	Then there is the huge dilemma of how balance and discipline can be restored to the Government's finances in future. Today's figures of projected national debt will cast a dark shadow over future generations, but one thing is more important than anything else when it comes to the public finances—growth. Without growth, there will be no money anywhere to pay off the nation's debt. That means that we must not pull the rug out from under the British economy just as it is struggling to get up off the floor. So the Conservatives are, I believe, just plain wrong to propose slashing budgets immediately, which would be an act of monumental economic masochism. But the Government are wrong, too, to commit right now to the biggest fiscal contraction in the OECD— according to the Government's own figures published this morning, they have committed to a massive 16.75 per cent. cut in capital investment by 2011 when they have no idea what the economy will look like by then and no idea of whether cuts would kill off growth just as it gets going.
	We should remember that this time last year, the Chancellor said that the economy would be growing by 2.5 per cent. today, and yet it is now registering 3.5 per cent. negative growth. Six months ago, he said that the recession would be over by 1 July. The Chancellor may fancy himself as the new Mystic Meg, but he should get out of the predictions game. We do not know where the economy is going, so we simply must keep our options open until growth is restored, when we will need to face difficult choices. That is the only honest approach.
	The Chancellor should adopt an honest approach on spending, too. He is trying to pretend that £15 billion can be stripped from public spending without anyone noticing, but talk of pain-free efficiency savings is a joke. We all remember Gershon. All it proved is that money can be moved from one column to another and called a saving.
	The Liberal Democrats would do things differently. We would take big choices about what the Government should and should not do in the medium term, once growth has kicked in again. We would ask difficult questions: is the 50 per cent. target for university students either necessary or affordable; what is our international military role and how much should we spend on it; are exceedingly generous pension entitlements for well paid public servants fair or affordable? We need a national debate about what the state can and cannot afford in the future, not Whitehall salami slicing today. That is the responsible way—the honest way—to reduce spending in the years ahead and avoid painful higher taxes.
	This Budget could have been a great Budget. It could have set a new direction, a new course for Britain out of recession and towards a stronger future. We could have had a new, fair, transparent tax regime; a better banking system; green jobs and green infrastructure for a sustainable economic future; a new era of openness from Government about what the public purse can sustain; and a new era of responsible, lean government that improves people's lives. Today was an opportunity to deliver practical help, but Labour is out of ideas and out of steam. Today the Labour Government have condemned us to years of unemployment and decades of debt. The country deserves something different.

John McFall: Today's Budget is against the backdrop of a banking crisis that has in the past year become an economic crisis and is now a social crisis. Witness the problems in Europe, whether we are talking about France, Spain, Greece, or the Republic of Ireland, not to mention the central European countries. Against that backdrop, thousands of jobs have been lost and many more people have had cuts in their working hours and wages.
	When the Treasury Committee visited a number of regions in the UK just over a month ago—we went to Edinburgh, Belfast and Halifax—we came across owners of small businesses who feared bankruptcy, home owners who feared repossessions and many more people who simply feared the unknown. Mention has been made of help for young people, particularly students and school leavers, about 600,000 of whom will be leaving education this summer for an uncertain job market.
	In the past, there existed a social contract where individuals as well as companies were free to prosper or fail on their own merits, but with the collapse of the banking sector and the necessity to rescue the banks, which took devastating risks with ordinary people's money, that social contract has been damaged. Trust and confidence in the banking sector need to be re-established. That will not be an easy task; it will be a long and painful task. In the midst of that, people are looking for a fairer society, which is why I welcome a number of the measures announced by the Chancellor today.
	The Treasury Committee will be scrutinising the Budget over the next week; indeed, we will have three evidence-taking sessions and will hopefully be able to report to the House in time for Second Reading of the Finance Bill a week on Tuesday. When we scrutinised the 2008 pre-Budget report, the Committee recognised the uncertainty of the economic outlook, but was concerned that the Treasury's forecasts were on the optimistic side, as has been proved. In the next week or two, we will cast a scrutinising eye over these growth forecasts and the plans over the next six or 10 years to balance the budget to achieve an even fiscal landscape.
	I have already mentioned the Treasury Committee visits around the country. We found that access to lending was an important issue then, as it still is now. The banks claim that they are increasing access to credit, but we heard in our visits that small businesses were still unable to access the lending that they need to keep going. The work of the Lending Panel, which the Government have established, is hugely important. I would like to see the results of that panel published at least every quarter, so that we can keep a handle on exactly what the banks are doing and on how much lending is actually taking place.

Lembit �pik: On those visits, was the right hon. Gentleman aware of, or did he come across, the fact that quite a few businesses, far from getting more lending, are experiencing a squeeze on their overdraft facilities, which are being reduced by the very banks that are promising to be more generous? Will his and his Committee's investigations perhaps consider whether anything in the Budget might force the banks to be more generous with their overdraft facilities, and certainly not reduce them, when those companies are desperate to invest?

Frank Field: Is not there a real difference between now and the age that Sam Brittan writes about? When we were trying to balance our wartime budget, there were other major allies who were in surplus and only too willing to lend to us. They are also now in deficit and wishing to borrow.

John McFall: I welcome the commitments made by the Chancellor today to provide funding to open fields that were previously unprofitable. That is good, but I give him advance notice that we will question him about North sea oil when he appears before the Committee next week. I am flagging that up pretty early.
	I want to keep focusing on unemployment. A couple of weeks ago, I hosted a meeting in Parliament with Professor David Blanchflower, the departing member of the Monetary Policy Committee. He predicted that unemployment could be 4 million by 2011 or 2012. That is a dismal background, but it illustrates why we need to keep helping people if there is such a background. If that is the case, we will find that the Government are spending money to assist people.
	Statistics from the House of Commons Library, sourced about a year ago, showed that every unemployed person would cost the state 10,000. That does not cover welfare benefits or local authority benefits such as free school meals or whatever people get, but if the figure is indeed 10,000, having 4 million unemployed would result in 40 billion a year being spent by the Government. Is it not sensible to try to avert or avoid that unemployment by spending at this particular time?
	On the most vulnerable, the Government have produced ambitious targets on child poverty, but today, 30 per cent. of children in the United Kingdom still live in poverty. The Government's commitments on child poverty, while admirable, still have a long way to go to ensure that we eliminate child poverty by 2020. In my constituency, one child in four grows up in poverty, according to the End Child Poverty campaign.
	The Joseph Rowntree Foundation estimates that child poverty costs the UK 25 billion each year in extra spending on social services, health, housing, education, crime and so on. The Government's moves to create jobs are important in the light of the fight against child poverty, because long-term parental unemployment is one of the biggest causes of child poverty. We will not be able to reduce it significantly while unemployment is rising. I welcome the Government's commitment in that particular area.
	The Government's commitment to invest more money in building homes will directly benefit children living in poverty, because shortage of affordable housing is one of the biggest barriers to eradicating child poverty. However, measures to meet the Government's housing targets and to protect the homes of children whose parents have lost their jobs are really important steps to reducing the number of children growing up in poverty.
	Other vulnerable groups mentioned by the Chancellorpensioners and those in low-paid work who do not have childrenwill also benefit from the Budget. I welcome the Chancellor's measures to help pensioners, especially the savings initiative and particularly in the ISA field.

John McFall: The 100 million is over and above the money that local authorities are already receiving, and is intended to support energy efficiency measures. I welcome that 100 million from the Government, but is there still a long way to go? Of course there is. Some years ago the Government commissioned a report from Kate Barker, who was a member of the Monetary Policy Committee at the time. According to her, between 120,000 and 140,000 houses needed to be built each year. That is an ambitious target, but we are moving along the path towards it. However, we also need to prepare the economy for the future.
	The Chancellor mentioned the banking and financial sector. That sector will not contribute the same amount to the economy as it has in the past. It will shrink: everyone has acknowledged that, not least the Governor of the Bank of England when he appeared before our Committee. We need to rebalance the economy, and ensure that it functions in all the regions.
	The banking practices mentioned by the Chancellor generated the highest yields, but they also generated a massive amount of risk, which ultimately led to a global banking crisis and which we are no longer prepared to accept. In the future, our economic growth should not be driven by risky banking practices. At this stage, it is important for us to take a long-term view and to invest in areas that will be drivers for growth, including high-value manufacturing. Our infrastructure will also need investment to support a post-recession economy which, as I pointed out earlier, will be less centred on the City of London. The Treasury Committee is conducting an inquiry into the banking crisis, and we hope to publish our first report in the next week or so. We intend to produce another report on corporate governance, followed by reports on consumer issues and international regulation and co-operation.
	I suggest to the Chancellor that any financier whom he meetsand any whom I meetshould be told that it will not be business as usual in the future. Some people in the City have their heads down, thinking that the storm will pass and that in a couple of years they will be able to renew the old practices and the old ways of doing things. The old practices and the old ways of doing things should be consigned to the dustbin of history, and new ways, involving putting customers at the forefront of banks and financial services' interests, should be promoted.
	Corporate governance should mean good management of companies. As the Chancellor knows, it was a shocking lack of corporate governance that led to the demise of Royal Bank of Scotland and HBOS. In the case of Royal Bank of Scotland, the problem was the acquisition of ABN AMRO. The then chairman of RBS, Tom McKillop, told the Committee that the bank had bought ABN AMRO at three times the market value price. It bought the company on 15 October 2007, a month after the crash. That was a mistake that brought the bank down. The chairman of HBOS, Lord Stevenson, acknowledged that there had been mad, risky lending and no oversight of the risk assessment, and that that had brought the bank to its knees.
	On the boards of those banks were people whom we would term the great and the goodvery influential people with a track record in the financial services industrybut they did not make a squeak, because profits were coming through the door. They turned their faces in the other direction. We must have a corporate governance system which ensures that risk is assessed. At the end of the day, the long-term interest of the company rather than the short-term interests of the executives should prevail. Sadly, it is the latter that we have seen in the banking crisis to date.
	Mention has been made of the public debt and whether we can afford it. I would turn the question around, and ask whether we cannot afford it. Opposition parties will argue that we need to cut public spending dramatically, but cutting public spending dramatically is the wrong way to go about things at present. It would appear from the comments of the Leader of the Opposition that if the Conservatives were in power the cost would be even higher, because they would fail to take action to protect jobs and homes.
	Last year, the public debt was estimated at 8 per cent. of GDP. Seven per cent. of that debt was a result of the automatic stabilisers; only 1 per cent. was a result of the fiscal stimulus. The Conservatives have said that they are signed up to the Government's proposals on the automatic stabilisers. All that we are talking about here is a 1 per cent. fiscal stimulus, and we need to ensure that we help people with it. I suggest to the Leader of the Opposition that he is on the wrong track in that respect.
	A fairly wide debate is taking place on the fiscal stimulus and its affordability. Only this week the National Institute of Economic and Social Research, one of the country's leading economic think-tanks, said that the United Kingdom could still afford a fiscal stimulus, and suggested that the Budget should contain a stimulus amounting to 2 per cent. of GDP30 billion.
	On the subject of the public finances, let me again quote Martin Wolf of the  Financial Times. On 18 March, he wrote:
	it makes no sense to avoid action that would greatly lower the real economic costs of the crisis now, to eliminate a hypothetical and avoidable fiscal crisis later on. This would be like committing suicide in order to stop worrying about death.
	Given the Government's commitment to help people and to make this a Budget with a human face, I welcome the initiatives announced today, but are they enough? I fear not. Will the Treasury Committee be scrutinising the Government on their public debts and their commitments to assist the most vulnerable people in society? We certainly will. We look forward to renewing our engagement with the Government next week, when the Chancellor will come before us.

John Redwood: I am a director of a couple of companies. I have declared my interests in the Register of Members' Interests.
	This is really the Damian McBride memorial Budget. It is a Budget of the spinners, by the spinners, for the spinners. It is a Budget with all the black arts around it. It is a Budget that wants people to believe that it will all be fine in a couple of years' time. It is a Budget built around numbers that are entirely fantasyland economics. It is a Budget which pretends that there will be massive growth in two years' time, and that that growth will miracle away the enormous deficit and the huge debts that will be the Government's only legacy.
	This is a Government who, just a few months ago, were in denial that there was even a recession on here in the United Kingdom. This is a Government who would not admit six months ago that they would preside over the worst collapse in any major western economy, as measured by the public finance figures. This is a Government who a year ago, at the time of the then Budget, said that there would be a little drop-off in the growth rate, but that Britain would come sailing through because they were married to Prudence and had abolished boom and bust.
	The Government are not married to Prudence, Mr. Deputy Speaker. Indeed, the Prime Ministerthe former Chancellordivorced her many years ago. Now they are holding a drink and drugs party on the poor lady's grave, inviting everyone to come along and spend as much borrowed money as possible. I do not think that the current Chancellor has ever met the lady Prudence. It is quite obvious from his figures and his representations today that he does not have a clue about the fact that it is necessary to balance the books at some point. He has no clue about how to balance the books, and, as my right hon. Friend the Leader of the Opposition so powerfully observed, it will take another team of Ministers to deal with the awful job of cleaning up the mess.
	Let us look first at the economic forecasts. I am grateful that at last, after it had become obvious to everyone else in the country, the Government have accepted that there will be a very serious downturn this year. After all the lying, weaving and ducking outside this House and the funny figures given inside it, we now discover that even the Government admit that there is going to be the most severe recession since the warnot only the deepest, but also the longest. We now have a Government who admit that there is not about to be an upturn any time soon. According to the new forecast, the magic Ides of July will come and go without us seeing the green shoots, let alone the recovery.
	As my right hon. Friend the Leader of the Opposition memorably said, the Government are forecasting a trampoline recovery some time later, with most of the benefits of this improbable gymnastics delayed until after the general election, because they do not want the electorate to be able to compare what actually happens with the ridiculous forecasts they are now coming up with.
	Why is it that after 12 years of this Labour Government, who said they were married to Prudence and had learned the lessons of their trip to the International Monetary Fund and of previous economic crashes, we now see this Government in complete disarray, presiding over not just a big increase in debt, not just a whopping increase in debt, not just a colossal increase in debt, but a bigger increase in debt than all previous Governments from time immemorial over a millennium in this country had managed to borrow together? If someone had made that up for a BBC drama, I think that I would have been one of the first people moaning again that the BBC had overdone it and that the plot was preposterous. Yet that is what today's figures tell us; they tell us that the Government are seriously suggesting that they should, and they can, and they will, borrow more money in a couple of years than all previous Governments added together over many centuries, including all the war debt that we still have, inherited from those earlier tragic and difficult times when different rules and priorities clearly applied on a cross-party basis.
	How did the Government get into such a dreadful quagmire? There are three main reasons. First, they foolishly, rashly and needlessly committed this country's public accounts to two extremely large banksbanks which, as my right hon. Friends on the Front Bench have again memorably said, were too big to fail and too big to bail. The Government were quite wrong to force those banks, at the fateful weekend in question, into trying to find capital that quickly, and they were quite wrong to say that the taxpayer would stand behind those banks and buy all those new shares at too high a share price, which they forced upon the poor reluctant taxpayer. There were many ways of sorting out and standing behind those banks without putting all that taxpayer cash on the line, and the last thing we needed to do in the parlous financial condition we already found ourselves in was put the taxpayer fully, squarely and completely behind the 3 trillion of liabilities on those two massive bank balance sheets, with all the consequences that followed.
	I have not had a chance to read the detailed figures, which were not released to Members of Parliament until immediately after the Chancellor sat down, and of course, the Chancellor did not give us the actual cash figures for his current view of how much those banks are going to lose us. However, he did say in his statement that he now recognises that there will be material losses for the taxpayer. We have heard the figures in the press; as always, we could have learned most of the Budget in advance by listening to the media over the weekend preceding it, and in the days before we in this House are graced with some kind of statementand then if we really want to know what is going on, we have to go away and read the documents, because they contain at least some of the bad figures that the Government wish to conceal.
	We have gathered, however, that the debate is between the Chancellor and the IMF. We learn that the Chancellor thinks that the Government are going to lose 60 billion on the banks. I will be delighted if they only lose 60 billion on the banks, as I have always forecast that they will lose a lot more than thatbut let us just think about this: that is 60 billion of needless losses subsidising rich bankers and foolish banks. Why do a Labour Government want to do that? Do they not realise that that is 1,000 for every man, woman and child in the country? What could my constituents do with 1,000 per head extra this year? Would it not have been better to have given them the money so they could have sorted their own lives out and bought a few more things to create some demand, rather than to tip that 60 billion down the drain by making the taxpayer stand behind the banks and pay for those losses?
	The IMF, however, says it thinks the losses will be 200 billion, and I fear that it is nearer the mark. We understand that some of the very expensive spin doctors and Treasury officials employed at our expense have thought it a productive use of their time to try to get the IMF to calculate its figures againin other words, If there's a problem, let's try to spin our way out of it. I urge the IMF not to be too lenient with these Ministers and this Treasury, because I fear the losses are, as the IMF has said, going to be all too large. It shows the Government's priorities that when they nationalise the banks they will not accept that there is any possibility of loss at all, when they have the autumn statement they leave all the figures on the banks out of the borrowing because the borrowing looks too awful with the banking figures included, and when they finally get to the Budget they realise that none of the commentators and City experts are going to buy the idea that there will be no losses on those banks, so they come up with a figure rather smaller than those of the serious commentators and hope to get away with it, and when no less a body than the IMF rumbles them, they send the spin doctors out to deal with it and try to get the figures massaged in the right direction.
	That is the first reason why we are so colossally in debt and so hugely at risk. Never before have a British Government been stupid enough to nationalise banks that in aggregate are bigger than the national income. Never before has a group of Ministers blundered into such a colossal and risky financial commitment as this group of Ministers has. Given the questions I have asked over the months about this, I feel that when they took the decision they had no idea how big the thing they were taking on was, and they certainly had no idea that only 1 in every 7 on the RBS 2 trillion balance sheet was a loan to a British person or British company. Like them, I want to make sure that British companies and British people do not suffer because of the awful credit crunch. Of course I wish to see the creditors protected, and of course I wish to see lending resume at sensible levels in this country, but only 1 in every 7 on the RBS balance sheet was doing any of those things, yet this Government had to blunder into backing the whole balance sheet, and who knows how much they will lose.
	How much do the Government reckon they will lose on the 500 billion casino bank within RBS that they have bought? What action have they taken to protect the taxpayer interest? Have they instructed those bankers to close down the dangerous positions? Have they asked them to calculate the losses and take the ones that could get bigger? Have they agreed with them that they will net out a lot of the positions so we can begin to see what we have got and start to reduce the total risk for the taxpayer? I do not think they have done any of these things. I do not think they have got a clue; I do not think that they care. They thought it was a great idea to nationalise a bank. They thought that would give them control over the economy. They will learn the hard way that they do not control the banksthe banks now control them.
	The second reason why we are so deeply in debtand, even worse, a reason why we will get increasingly into debt under this Governmentis the very violent boom-bust cycle that they have unleashed upon our poor economy. This is a boom-bust cycle that was made particularly violent in Britain by wrong policy here in Britain. This is the Government that, when it was becoming obvious to many outside critics that a huge credit explosion was under way, instead of calming the flames by taking some of the material off the bonfire, decided to stoke it some more. This is the Government who, instead of saying to the private sector, You're overdoing the off-balance-sheet borrowing, boys and girls, went out and said, Do more off-balance-sheet borrowing. We'll show you how to do it. We're going to finance most of our public projects on the never-never on an off-balance-sheet basis so that people don't realise that we're building up extra public debt, don't know that we have broken all our own rules, and don't know that we are doing this on the never-never in the hope that some future Conservative Government are better at running the public books and are able to pay the interest and the debts off.

John Redwood: I was using never-never in the common senseI meant as a way of financing oneselfbut we all know that, as my hon. Friend rightly says in correcting me, the never-never is the ever-ever; it is ever-ever with us, and we will have to repay it. These Ministers thought that they could get the glory for the spending and leave the bills with the British taxpayers. These Ministers thought that they could do the borrowing round the corner and leave it off the balance sheet, and that would stimulate the economy. These Ministers thought that if they are having a drink and drugs party on Prudence's grave, why not let the public sector lead the way and buy more of the drinks, while the private sector is encouraged to do exactly the same thing.
	Far from being the surprised moral Government who did not quite understand how things were out of control, and who can now condemn bankers for getting it wrong, this was the Government who were leading the never-never society, were leading the charge and were leading the off-balance-sheet movement, and who were urging the financial markets of Britain to come up with ever cleverer and, unfortunately, dearer ways of feeding the public monster that they were creatingthis huge debt machine in which they were revellingso that they could have more press releases and more initiatives, and try to give people the impression that they were investing. If only they had been investing, it might have been a good ideabut they were not investing. They were squandering and wasting, and they were not getting the efficiencies, improvements and extra services that we would have liked. There needed to be some extra spendingGovernments always have to spend extra on services to improve thembut they were blowing the money in all sorts of ways, not just on nationalising banks, but in ways that I shall examine briefly in the third part of my comments, which will deal with public spending.
	The Government made the cycle worse by the lack of spending discipline and by the over-borrowing in the public sector, and by rigging the inflation target at the end of 2003a little before the 2005 election. They saw that the Bank of England's Monetary Policy Committee was likely to have to put interest rates up, because it could see that inflation was perhaps going to get out of control and credit was a bit too lively. So what did the then Chancellor do? He changed the target to one that was performing much more modestly than the retail prices index, and I am sure that he knew, because he is a clever man who studies these things, that by changing that target, interest rates would have to be kept lower for longer. That fateful decisionthat decision to encourage the borrowing binge in the private sector by keeping rates too low for too longstoked up the private sector half of the violent cycle.
	By 2007, when it was becoming clear even to the Government that they had overdone it, they allowed or encouraged the monetary authorities to put the brakes on. We lurched from careering up the motorway at 140 miles an hour to trying to do a complete stopan emergency brakeby putting interest rates up and withdrawing funds from the market. They overdid it, so we lurched from excessive boom to excessive bust, and we, the passengers in the car, were hurled towards the windscreen by the effort to bring the vehicle to a grinding halt. It was a disgraceful piece of bad driving for which the Government will not be forgiven for a very long time by the electorate, who can see that British actionsactions by the authorities here in the United Kingdommade the cycle more violent and worse. China, India and Germany did not have this sort of cycle, but we had it here, because our authorities were uniquely incompetent and uniquely unable to see how they were overdoing it in both directions.
	The third reason why we are so massively in debt is that Labour has blown it with its public sector spending programmes. Contrary to the constant rumours from the Labour party, none of us came into politics to fire teachers, nurses or doctors; Labour Members should accept that all of us, from all parties, come into politics because we want better schools, better hospitals, better public services and better standards. If they were to examine the record of past Governments, they would see that every Government, be it Labour, Liberal or Conservative, have every year, or nearly every year, increased expenditure on those vital front-line services and the people who deliver them.

Anne Main: The Chancellor should be thanking the good people of St. Albans, who pay the most into his coffers but get the least back in terms of being able to deliver front-line services. My area rattles around at the bottom of the league table in what we get back, so we struggle. I am sure that the good people of St. Albans will wonder how on earth they are going to manage with the new cuts that the Government will be putting in place, given that they have been struggling in the good times. All the things that I heard in the Budget to do with the stamp duty holiday for homes worth up to 175,000 do not help St. Albans. I heard nothing about small business rate relief for my local small businesses; in St. Albans that relief does not even kick in. I am sure that my right hon. Friend will agree that the Chancellor seems to have abandoned places such as St. Albans, merely seeing them as cash cows: he just spends the money.

John Redwood: For St. Albans read Wokingham; my hon. Friend has spoken powerfully for me, for herself and for many of our right hon. and hon. Friends. Our constituents, by and large, pay the bills, go to work, work hard, are prudent and savethey do all the things that, we hope, Governments of all persuasions wish them to dobut we are the ones who get socked with the tax bills, and we do not get any of the extra money if the Government are thinking of money for better schools or hospitals. It is very noticeable how unfair the system has been. The Conservative Government to whom I belonged always gave more to areas with greater needsand of course that is fair, and a common-sense approachbut the situation has now become extreme. Our areas have needs too, and, as my hon. Friend rightly says, the distribution system is very unfair.
	I wish to draw attention to the two economies out there: the huge divide in modern Britain is between those of us who work in the public sector and those who work in the private sector. The big divide is between those who are trying to run small and medium-sized entrepreneurial businesses and their staff, and those who are in the large bureaucracies of the public sectorthose in the quangos, the councils and the Whitehall Departments. There is a monumental sense of injustice, because when we talk here about tough choices we are talking about whether we increase public spending at 2 per cent. or 1 per cent. in real termsabove the inflation levelor about whether we are going to have three nice extra things or one nice extra thing in our budgets, but what people in private sector companies are talking about during this awful recession is whether they close one factory or two factories out of their three or four, and whether they get rid of 20 per cent. of the work force today or whether they may have to fire 25 per cent. of the work force in two months' time because demand is so low. They also talk about how they can halve their stock levels because they cannot afford to maintain them and they cannot get the borrowing for the stock, and they discuss what impact that has on all the people who would like to carry on in their jobs making things.
	I do not think that these Ministers have a clue how tough it is out there for private sector businesses. I do not think that they have any idea what it is like for businesses of just four or five people, where those running the business are personal friends with the individuals whom they are employing, but at some point one they are going to have to say to one or two of their employees, Either you go, or we all go. That is the tough choice that such people are facing; that is the reality. They are the people who are facing this huge rash of extra bureaucracy, extra regulation and changed tax rules that makes their lives even more difficult at a time when they need to concentrate on sorting out their business, when they need a break from their banks and when they need a break in terms of improved demand and improved economic prospects.
	It is this huge divide in Britain that is so unfair and that is causing so much anger, and it is one of the main reasons why the governing party is so low in the opinion pollsabout which it must be extremely worried. When listening to the Chancellor and hearing about his many schemes for people who, sadly, lose their jobs, one wondered whether there was at last some forethought about the colleagues of his whose jobs are going to be destroyed by his very bad economic management, and who may well be feeling that pain in a year. They will then discover that it is very brutal out there and things are very different when one loses the protection of the indexed pension, the decent salary, the expenses and all the rest of it.
	The public expect us to do everything we can to try to reduce the length, depth and severity of the recession, and to make the tax changes or produce the schemes that might make a difference to those who are struggling to keep going potentially good businesses that have been very badly damaged by the current climate. But they also expect us, above all now, to treat their money seriously and to spend it wisely. They do not believe for one minute that all this extra money that has been tipped in, so much of it borrowed, is buying them a better school, a better hospital, safer streets or stronger border controls. They think that a lot of it is wasted.
	I called this Budget the Damian McBride memorial Budget, but I now wish to say something nice about the Government. I know that I will upset my right hon. and hon. Friends by saying so, but I think that the Government did a very good thing in sacking Mr. McBride. I think that the Labour party would agree. However, I have some advice for the Government. They still have dozens of McBrides left in their organisationspin doctors spinning in favour of their bosses and the Governmentalthough I hope that none is doing all the things that Mr. McBride was doing, at least not any more.
	The Government do not need those spin doctorsindeed, I fear that I am doing the Government a good turn by giving them this advice. One reason why they are getting such a dreadful press at the moment is that those spin doctorsand their bossesare turning on each other, fighting for power and the ear of the current incumbent, and positioning themselves for the leadership race. If the Government got rid of more of their spin doctors, I could say nicer things about them. It would be a good saving, because many are supernumerary. They are letting the Labour party and the Government down, so some savings could be made there.
	A much bigger saving in cash terms could be made by cancelling the ID card scheme and the national computer database. It is hugely expensive and will be deeply intrusive, without making our country any safer. Burglars will not take their ID cards to the scene of the crime and leave them on the mat when they leave. We already have identity documents that people have to show when they arrive at our borders; they are called passports. Instead of ID cards, we should have a border authority that wants to inspect passports properly and make sensible decisions about those visiting our shores. These people do not come across in rowboats; they are not sneaking into the country. They come in through the front doorthrough Gatwick, Heathrow and Dover. Let us do the job at the port of entry with the proper documents. We do not need to make everyone else live in fear that they will be caught without their ID card when digging at the bottom of the garden. If the Government do not scrap the ID computer scheme, they are not serious about civil liberties, and they are certainly not serious about saving money. It is a no-brainer, because it would be a popular public spending cut.
	Unelected regional government is widely loathed and hated in England. The Government can no longer say that it is hated only in parts of England with Conservative local government administrations, because they decided to test the popularity of regional government in what they thought was the Labour heartland of the north-east. At the time, it had mainly Labour MPs and mainly Labour councilsmore recently elected than some of the MPsbut the Government lost that vote not by 55 to 45 or 60 to 40 but by four to one against. If they want to repeat the experiment in my part of the world, we can make it five to one or six to one against.
	Regional government is widely hated. It is a huge cost burden and involves unnecessary administration, bureaucracy and regulation. If something needs spending on or regulating, it should be done nationally by the Departments or locally by the county or unitary authority. We do not need the middle men and womenlet us sweep them away. Again, I fear that that would make the Government popular, but I can recommend it because I know that there is no chance of their listening to the people of Britain. The Government will go back to the north-east, where they still hope to win some seats in the general election, and they will have to explain why they rode roughshod over the freely expressed and sensible views of the people there.
	The people have rumbled the Government. We do not need European government, national government, regional government, county government, district government and parish government. That is six layers of government and too many people bossing us around, too many people on expense accounts and fancy salaries and with public sector company cars. Get rid of some of them. The obvious place to start is the regional level, and it should go.
	Let me mention something that I have not mentioned for a very long time in this Housemy hon. Friends will be very disappointedand that is the subject of the European Union. Tony Blair, in the good days, thought that we had so much money that he would like generously to give some of Baroness Thatcher's rebate back to our partners. The Government always tell us that they have a lot of influence in Brussels and that they get on well with our partners. I think that the Prime Minister should go back there next week and say that his predecessor made a huge mistake.
	When Tony Blair generously decided to give all that extra money to the rest of the EU, he thought that Britain was strong, prosperous and well run. The present Prime Minister now realises that it was not, it is nearly bankrupt and borrowing too much money. We cannot afford to borrow extra billions of poundsand it will need to be borrowedto give to other countries, some of which are in a stronger financial position than we are. It is a little challenge for the Prime Minister after the triumph of saving the world: to go back to Brussels, say that his predecessor wrongly and stupidly gave away the good deal that Baroness Thatcher had negotiated with great skill, and tell them that the British people now need that money, because it will all be on our overdraft as the public accounts are out of control.
	I come to the public sector rich list. I pay tribute to the Taxpayers Alliance for the work that it has done in getting to the truth about some of the waste and grotesque excess that has substituted for proper public spending under this Government. Up and down the country, there are hundreds and thousands of senior officials in posts in quangos, in Whitehall and in local councils who are earning mega salaries. Those salaries do not respond to market pressures. In the cold and hard private sector world of which I have reminded the Government, people on high salaries in companies under pressure are not only losing their bonus, but will have to take a pay cutif they are lucky, because otherwise they will lose their job. When they get another job, if they manage to do so, it is at a much lower rate of pay than prevailed a year or two ago.
	I am all in favour of people being highly paid if they earn it and the taxpayer does not have to pay the bill. Good luck to them; I want more and more of my constituents to have well paid jobs. But we cannot afford to replicate the high pay of the successful in the competitive sectorfreely, out of the money that customers make availablein the public sector, where most of our staff are motivated by a sense of public duty and think that, say, 63,000 a year is a decent rate of pay. They should not need 160,000, 260,000 or 400,000 a year, which now seems to be the going rate for some of these quango jobs.
	The Labour Government are rediscovering their socialist roots in a big way in this Budget, but I suggest that they could do themselves a favour by having a new rule in quangoland and throughout the public sector: not to give people salaries above the Prime Minister's level of pay, and to go back to those already on mega-deals and ask them to make a contribution by taking a pay cut or accepting really tough performance criteria so that they have to earn it. We all know that most of those jobs in the public sector have been a joke so far and performance pay has been granted too readily.

Michael Jack: May I first remind the House of my entry in the Register of Members' Interests? I am a non-executive director of a plc. The first test that one has to apply to any Budget is a bit like the question that one asks after a Chinese meal: There is an awful lot of it to digest, but how will I feel in the morning? The second test is to ask what the reaction was in the House. This Budget got what I might describe as muted applause towards the end. Both the Chinese meal test and the applause test reflect that there was an awful lot of very difficult information to digest.
	I was thinking about the Budget and, remembering the time when I was in the Treasury, reflecting on the kind of decision-making process that has to be gone through when a Budget is framed. I was almost stunned mentally by the enormous size of the numbers, and the changes that have occurred in the state of the public finances even since Budget 2008; that is without even commenting on the pre-Budget report. Last year, I wrote an article for my local newspaper, in which I said that between planting my potatoes on my allotment in May and harvesting them in September the world had fundamentally changed, economically speaking. I do not think that any of us have seen such an enormous turnaroundnot just in the United Kingdom economy but in the global economyinvolving such very large numbers in so short a space of time. It takes a long time for the public to come to terms with the enormity of what has occurred.
	The Chancellor was almost emotionless in his delivery; he read out the Budget a bit as though it were the annual statement at the annual general meeting of some great corporation. The attitude was, We've got everything under control. Fingertips are on the pulse. We have understood the numbers, and we have got the model working. Everything is all right. In about 2015, all these problems will be over. It was just surreal. It was too serene and did not, in my humble judgment, reflect the reality and the pain to which the real economy is having to adjust in a very short space of time.
	At Prime Minister's Question Time, the Prime Minister denied to my right hon. Friend the Leader of the Opposition that boom and bust was the busted flush. That was not looking reality in the eye. Let us spend a moment analysing what the former Chancellor of the Exchequer used to say. When he said, I'm bringing an end to boom and bust, fundamentally he was trying to say, I'm going to restructure the economy. We're not going to do what previous Administrations did. We're not going to put the economy at risk. However, if we look in the Red Book, we see a rising trend in the percentage of gross domestic product that was used for public expenditure before the recession. That brings to mind that much-used but now rapidly discarded word, prudence. It indicates that what perhaps was a responsible start to the former Chancellor's regime rapidly went off the boil when public expenditure and borrowing got out of control.
	I want to speak on the theme of what I consider to be a failure of economic intelligence-gathering. A number of colleagues in the House looked askance when the Chancellor said that the year after next, there would be 3.25 per cent. growth in the economy. They thought that that was absolutely for the birds. In fairness, if we look at the National Audit Office report issued with the Budget, which talks about the assumptions, we see that there are some reassuring words in there, suggesting that the Treasury may have got it right. I have to say that I find that very difficult indeed to accept.
	I note with interest that the Under-Secretary of State for Defence, the hon. Member for Grantham and Stamford (Mr. Davies), who has responsibility for defence procurement, is on the Front Bench. Newly ensconced in his role, he will understand the amount of money that is being spent on military intelligence-gathering. He will also understand the absolute importance of that intelligence-gathering if we are to configure our military forces' activity properly. When I was in the Treasury, the Bank of England had its agents who went around the country getting a feel for what was happening in the economy, so that they could advise the Governor on what was going on, and what advice he ought to givethis was before the Monetary Policy Committeeon the setting of interest rates.
	Those agents still exist, but I question the intelligence that they and the Treasury are getting, and indeed the foreign economic intelligence. A great deal was going on in the world of banking, and new financial instruments were being created. Last year, in my Budget remarks and the Budget remarks of colleagues, we talked about the beginnings of the credit crunch and toxic loans. We looked at some of the first estimates of how much that was costing American banks. One wonders what went wrong in spotting what was going on, spotting what the decision-making process was, and spotting what the effects of the new financial instruments, and the new things that were happening, would be on the overall economy. I say to the Treasury Bench that in light of what has occurred, the speed with which it has occurred, and the impact that it has had, there needs to be a fundamental reappraisal of the collection of economic intelligence if we are not to be caught out again.
	In his Budget speech, the Chancellor put a lot of emphasis on improving the busted flush of tripartite regulation in our banking system. However, it was not so much regulatory failure that caused the problem in the first instance; it was the decision-making process in so many high-powered financial institutions on both sides of the Atlantic that fundamentally led us into the mess that we are in. If they had had better decision making or a less risk-averse approach, we might not be in this mess. I am all for making certain that regulation plays its part in protecting the public interest, but ultimately it is the decision-making process that got us to where we are. We need to understand what went wrong, and banks and financial institutions will have learned a bitter lesson and will now understand the need to improve their decision-making process.
	In the Chancellor's remarks he commented on the need to get the banking sector back into good order. I do not disagree with that. However, the Chancellor was somewhat sparse on what is really happening in that sector. I shall dwell for a moment on that because it still has a fundamental potential for impact on the ability of the economy to recover. The Chancellor did not talk about the fact that foreign and secondary banking in the United Kingdom is effectively over. Those banks have pulled out of our banking system, and the burden of dealing with the economic consequences rests fairly and squarely on the major clearing and investment banks that are UK based.
	The difficulty for those banks is that although their balance sheets have improved, and some of them have been stress tested and some of the news has been reasonably positive, there is still an innate nervousness in the banking sector about what may yet happen in terms of the toxic assets that are still out there, which are impossible to value and which may still have the potential to have a serious adverse effect on the world of banking.
	As risks increase in the world of banking, so the capital provisioning to cover those risks on bank balance sheets must increase. As a result, the cost to industry of financing its future needs and the ability to provide the liquidity for those future needs becomes ever more testing. Although the Government have done something towards the emergency shoring-up of bank balance sheets, there is still considerably more work to do if we are to get the liquidity flowing at a price that business can afford.
	In fairness, the banks are finding that their own lending one to another, though improved, is still costing them a lot of money. There are still difficulties out there if the economy is to recover. I say to the Treasury, and through the Treasury to the Bank of England, that there is still much work to be done if the banking system is to get back into operation properly.

Michael Jack: I acknowledge that a sensible series of measure were introduced to address some of the balance sheet difficulties encountered by the banks. Bearing in mind that if something of the order that the hon. Lady mentioned had not been done, bank collapse might have been reality. We have staved that off, but we still have some way to go.
	May I raise one issue which I think is interesting? There have been calls already in the debate for greater information about what is happening. My right hon. Friend the Leader of the Opposition listed many Government scheme that he believes are not working and not delivering results. On the other hand, the Chancellor enunciated and re-announced a further set of schemes. It is extremely difficult to know what is going on. Interestingly, a FTSE 100 company has to report to the City on a quarterly basis. It has to tell people what is going on. It makes a statement to the City because it is of material interest.
	We in the House of Commons have, in effect, two bites at the cherry in debating and dealing with the economy. We have the pre-Budget report, and sometimes it is difficult to get a debate on the economy after that report. Apart from that, we can ask the Chancellor a few questions. Then there is this debates, which lasts for four parliamentary days. After that, apart from Treasury Question Time, we cannot have a discussion on the topic most central to all of us, except in an Opposition day debate on the subject.
	Ministers on the Treasury Bench ask companies to pay their corporation tax on a quarterly basis. They are happy with major companies making statements to the City on a quarterly basis, so why cannot we have a quarterly statement to the House of Commons of what is happening, particularly at the current time? The Government owe it to the financial community to report with greater regularity on what is happening in the economy. Why we are sceptical about some of the numbers in the Red Book is that enormous sea changes occur between one set of forecasts and another.
	I had a look at table C3 in the latest Red Book. When I see the difference even between the pre-Budget report in terms of the borrowing figures and the figures that are now projected, I discover that in the financial year 2010-11 there has been a change of nearly 65 per cent. in the amount of money projected to be borrowed. For the next financial year, 2011-12, the projected degree of change is nearly 71 per cent. All I can say to the Treasury is that I am jolly glad they do not run a real business. If they were the finance director of a real business, or the sales director, and they came along and said, I'm sorry, boss, I've got the sales figures over 60 or 70 per cent. out, they would be going out of the door rather rapidly.
	It is no wonder people are sceptical about some of forecasting that goes on when that degree of difference is presented on a year-on-year basis. That is why quarterly reporting is needed, so that we do not have to deal [Interruption.] The Minister says, Rubbish. He is righteconomic rubbish. From the mouths of babes and sucklings on the Treasury Bench, we have the magic word rubbish. That is the problem. Unless the Treasury updates and reports on a regular basis, people will think the figures are rubbish, because the degree of difference between the previous and current projections is so enormous.
	May I comment on one aspect of the Budget that I very much welcome? The Economic Secretary to the Treasury and Under-Secretary of State for Business, Enterprise and Regulatory Reform is present. When he made his statement on the motor industry, he announced that the Government were working on a trade credit insurance scheme. I know that it has proved particularly difficult to find a mechanism for doing that, but I am delighted that a scheme now exists. I look forward to learning more about the details.
	I hope the focus of the scheme will be on the small and medium-sized industry, which is finding trading without that facility extremely difficult. There is a real urgency to get the scheme off the ground. I hope that at some stage in the course of the debates we might hear a little more about the timing. If the Minister wants to intervene and tell me a little more about how it will work and when it will happen, I shall be happy to give way. I see that so far he has not taken that opportunity.
	I shall move on to the Budget's contents for savers. I welcome the fact that people will have an opportunity to save a little more with their ISAs, but, for many hundreds of pensioners in my constituency, if not thousands, low interest rates in the real market have had a devastating impact on their standard of living. It is difficult for them to find an outlet where their money has security of tenure and can earn more than 3 per cent. It is interesting to note that one sector of the financial world where such returns can be achieved, however, is in corporate finance. The ratings agencies' opinion of some corporate bonds is still very high, and the coupon that they pay is attractive. However, it is a sophisticated area of investment, and not one that is easily accessible by the citizen who wants security for their savings while craving a better rate of return.
	I put it to the Economic Secretary that, between now and the Committee stage of the Finance Bill, he might like to think about carving out a special ISA that would be underpinned by the Government and enable people to put some money into corporate bonds. That would have certain advantages: first, people would receive returns tax free; secondly, if the Government could underpin the measure initially, it would have a degree of security; and thirdly, pensioners could access a higher rate of return. The latest corporate bond rate for Tesco, for example, is about 6 per cent. and, for BMW, it is about 5 per cent. There are other really good, gold-plated private companies offering to pay above the market rate, but it is difficult for the citizen to access that asset class.
	Perhaps the Treasury will consider a meaningful way to improve returns for savers by carving out a special additional ISA category for that type of investmentparticularly for the older pensioner. I notice that the Chancellor, in making the changes to ISAs, distinguished between people above and below the age of 50. The people about whom I am talking are the recently retired whose pensions have suffered because of what has occurred. They desperately need a higher and better source of income, and I believe that that is something to be sorted out.
	May I raise with the Treasury Front-Bench team one or two specific points? The Chancellor seemed to assure us that, if the retail prices index was recorded as a minus figure in September, pensioners would not lose out, but I was not sure whether he said that there would still be, for example, a 2 per cent. increase in their pensions in real terms or in percentage terms. We need some clarification of what is going on, because, as I understand it, technically speaking, pensions could decrease this year if the RPI formula is followed. Many people will be unclear as to precisely what the Chancellor meant.
	I welcome the investment announced in green energy, which is certainly to be applauded, but the Select Committee on Environment, Food and Rural Affairs, which I have the honour of chairing, will produce a report fairly soon on fuel poverty, so I counsel the Treasury to wait until we have reported before looking at exactly how it will spend the additional moneys, particularly on domestic energy efficiency, because we will highlight a better and more focused means of spending the money to address our current difficulties.
	On Monday 20 April, the  Financial Times made a simple but none the less profound statement in one of its leading articles. Addressing the question of public expenditure, it said that
	the UK must start a national debate on fiscal priorities.
	Although it is easy from the Opposition Benches to pick schemes such as ID cards, or anything else on which we do not think we should spend money, it must be noted that this country has not discussed what the state should spend taxpayers' money on. What are the fundamentals? I think that the public are open to a candid discussion, but I am worried that, given the electoral cycle, with a year to go until an election, both Front-Bench teams will be very nervous about discussing the unthinkableabout cutting back on public expenditure. However, I do not think that the public, who want to know the situation as it is, are so fearful that they could not express an opinion about what should occur.
	The reason why I mention the issue is that about one third of public expenditure is on social benefit payments, and, understandably in the current circumstances, that is difficult to change. In fact, we are increasing support through the tax credit system. Therefore, when we look at what is left, the two thirds, we realise that we do not have a lot left to reduce. We need a discussion about what reduction the public would stand either in absolute terms or at the current rate of increase in planned expenditure. I ask the Government to do that, because I notice that, for example, in table A1 of the Red Book, they already seem to have made a decision to reduce to the monetary sum of zero the reserve support for military operations. I am intrigued to know why our forces will seemingly have no reserves to call on from financial year 2010-11 and thereafter. The Government have rather cunningly hidden away in that table what appears to be a large cut in potential public expenditure. They have done that without any discussion, however, and I think that the public would like to know what that decision means for our armed forces. Against that background, let us also have some candour about the standard of forecasting.
	I shall conclude by considering some growth projections, however. Let us compare the previous Budget's growth projection for the current financial year of plus 2.5 per cent. with this Budget's projection of minus 2.75 per cent. The 2008 Budget document projected next year's growth to be plus 2.5 per cent.; now, it is projected to be plus 1.75 per cent. The fantasy world starts in 2011-12, because whereas in 2008, the projected growth figure for 2011-12 was 2.5 per cent., we are now asked to believe that, then, the economy will grow at 3.25 per cent., which is about three quarters of a point above the trend rate of growth for the United Kingdom economy.
	Notwithstanding what the National Audit Office said, I see the hand of a particular kind of Treasury discussion around such forecasts. Officials turn up, saying, Here you are, Chancellor: here's the macro-economic model; we've done our sums; this is what's going to happen. Then, we get the political horse-trading, when the Chancellor of the day says, Hmm, well what does perhaps another quarter point on growth mean in terms of either increasing tax revenues or reducing the borrowings? How much can I tweak these numbers so that the figures don't look in the real world quite so bad as the economic model suggests?
	I am afraid that asking us to believe that 3.25 per cent. growth is do-able for the period to which the Red Book refers calls into question some fundamentals of the recovery programme that the Chancellor sketched out in his Budget. There is a basic need to consider very carefully how such numbers are put together, because they fundamentally determine the outward projections of the state of the British economy. If the Treasury gets them wrong in the next 12 months to the degree that it got them wrong in the last 12 months, I am afraid that, while President Obama may talk about glimmers of hope, we may be talkingif we are still here in 12 months' timeabout glimmers of true disaster.

Stuart Bell: The hon. Gentleman is right about forecasting, but forecasting moves around. The forecasting in the press today, which was confirmed, was that we would have a fiscal deficit of 175 billion; yesterday's  Daily Telegraph, however, forecast one of 200 billionthat is, 25 billion more. That was another forecast. I am grateful to the hon. Gentleman for giving me the opportunity to cite the latest forecast of the ITEM Clubwhen it suits the newspapers, it is the respected ITEM Club; when the club does not please them, they do not refer to it. It is simply a forecasting club, which uses the Treasury model. It is Ernst and Young-based; I used to represent that institution, although I do not any more, so I declare that non-interest. In its spring forecast published today, the ITEM Club identifies
	signs that the financial situation is stabilising and credit conditions and confidence are starting to improve, partly in response to the vast resources which government has thrown at the problems.
	The ITEM Club has some merit, although that will not necessarily be reported tomorrow.
	Before I move on from the speech made by the right hon. Member for Fylde, I should say with the utmost sincerity that he made a fine point. I am the Second Church Estates Commissioner and have to look after the portfolios of the Church of England. The significance of corporate bonds and their returns is not lost on me, nor on the sophisticated investor. One can get a fine return. The right hon. Gentleman mentioned Tesco, and I can sayagain, as a sad caseto him that Gazprom is paying 6 per cent. on its corporate bonds at the moment. Linking an ISA with that market is not a bad idea, and I hope that the Treasury will take it up. It is one of the most constructive ideas that I have heard from a speech on the Budget.
	I forgive you, Mr. Deputy Speaker, but I was sorry that you did not call me immediately after the speech of the right hon. Member for Wokingham. His speeches are a centrepiece of the Budget debates in the House, and his one today would have been excellentif it had come from the Republican party in 1930. It would have been a fine example of Republican sentiment. He said that we should not have saved the banks; in the 1930s, the United States refused to save the banks and 12,000 of them went to the wall. We had six or seven years of recession, which became a depression. Truth be told, we got out of it only because of the second world war.
	The idea that we should not have saved the banks was excellent: every bank in the country would have failed. In his mild way, the right hon. Member for Fylde contradicted the right hon. Member for Wokingham, mentioning inter-banking. The inter-banking business in the banking sector is such that if one major bank, such as the Royal Bank of Scotland or Lloyds, had collapsed, every bank in the country would have gone. Let us make no bones about itevery depositor in the country would have lost their money and we would have had the most enormous crisis. The right hon. Member for Wokingham seemed to overlook that pointLet the banks go, and let the markets take their toll. That was not an option for the Government.

David Davis: This is not just a yes-no issue. The Government's whole approach in dealing with the banks has been similar to that of the Japanese Government nearly 20 years ago. The alternative is to do what the Swedes did. They identified the bank losses that were beyond recall and rescued the banks that could be rescued; they defended the system rather than individual banks. The question is not about whether to defend the banks but about how we can most economically rescue the system and then return to a system of financial confidence.

Stuart Bell: I will make reference to the forthcoming general election later in my speech. Clearly, this is a great day for the Opposition. They have never had to speak in the House on Budget day under a Labour Government when there has been a global recession. I can well imagine that they will make as much hay as they can while the sun shines. I would not say that that is wrong. We would have done exactly the samewe probably did, and were then disappointed when the election results came in. Who can tell what may be the case next year?
	The right hon. Member for Wokingham talked about the public sector borrowing requirement. He made a huge distinction between public sector and private sector workers. I am not sure that those who work in the public sector would be very happy about that. In Middlesbrough, we have public sector workers in health, education, social services and local government. They are there not only to serve the community but to help the disadvantaged people in that community and to try to get them into work. One cannot balance public and private sector workers like some kind of see-saw. They are all a significant part of our community and society.
	Getting back to when there was a Tory Government, when I was a city councillor in Newcastle, Michael Heseltine was Secretary of State for the Environment and came up there. We had 20,000 workers working for the council and he said, I want it reduced next year. When he came back the next year he asked, How many do you have?, and we said, 22,000. It is not as easy as simply saying that we should get rid of people from the public sector and put them in the private sector. That is not a possibility, as there has to be a balance in society between the public and the private. The right hon. Member for Wokingham missed that.
	It seems a long time since the leader of the Liberal Democrats, the right hon. Member for Sheffield, Hallam (Mr. Clegg), spoke. He began by talking about the best of times and the worst of times. It was not lost on us that he was referring to the opening sentence of the novel by Charles Dickens, A Tale of Two Cities. He did not really take us very far or make a contribution that I would wish to refer to. If I had a reference to it in my notes, I have lost it, so I shall have to move on.
	My right hon. Friend the Member for West Dunbartonshire (John McFall), who is not in his place, mentioned the section of the Budget about banking and the business community. He said that there were difficulties in the banks getting money to the business community and that the business community was not getting the service that it required from the banks. My information is that that situation is easing now, and that the lack of confidence in the business sector is holding up the traffic between the two. Getting confidence back in the business sector will be a major element in restoring some kind of equilibrium.
	It is very clear that we will never go back to where we were before. A comment was made about people not getting overdraft facilities, and those days will not necessarily come back easily or quickly. One Member asked whether the sovereign debt market can absorb the amount of debt that is on the market and coming through in bonds. I have to say that all the studies show that the market is holding up well. The ratings agencies are still giving us triple A ratings, and the essence of the Budget is to balance out what we are doing in the short term, how we will deal with the situation in the long term and what the markets foresee. By the markets, I mean business, private and international investors in our community. I was with a major state investor last night, who told me that they were very confident in the British economy and were keeping their investment going.
	The Leader of the Opposition asked whether there was an additional fiscal stimulus in the Budget. There is a fiscal stimulus in it, but it is small compared with the major ones. However, it is therethere is 2 billion for one particular project, but I did not quite catch which one from where I sat. In my view the fiscal stimulus has gone as far as it can go, and I would not wish to see any further fiscal stimulus at this time. The balance is right between the stimulus in the economy, how we project ourselves forward and how we pay for our debt as time goes by.
	As I said to the right hon. Member for Fylde earlier, in considering how a Budget looks we have to look perhaps 10 months or six months into the future. A Budget has many facets, and we will have to assess the full significance, impact and importance of this one in the current climate of economic downturn. That is the essence of it allwe must have a strategy, and the Chancellor put his strategy forward. The essence of it is the core values of fairness and opportunity.
	In considering the Budget, we must ask whether it is good for families. Is it good for those in employment? Is it good for helping those who have lost their jobs back into employment? Does it stimulate the economy and reform our taxes? How is it received nationally and internationally, and can it have the confidence of investors? At a time when public debt has risen to accommodate the recession and to lessen its impact, how does the Budget reassure the markets in the medium and long term? My assessment is that the markets will be reassured by the Budget. They will see that the Government are taking responsibility at this difficult time. In my view, the Budget lays the framework, not for now until the next pre-Budget reportit is a Budget that defines the economy's direction not for a year, but for several years.
	The hon. Member for Esher and Walton (Mr. Taylor) mentioned the general election. The Budget does not set the scene for a tax-cutting Budget next year; that was never on the cards. We know that next year is an election year, but we have already announced increases in income tax and national insurance for 2010-11 and 2011-12, and the Chancellor said that he would raise the higher rate of tax from 45 to 50 per cent. for the 1 per cent. who are the country's highest earners. I believe that that will be well received in the country; it is an appropriate measure at this time.
	On competitiveness, the Budget must be construed not as a stand-alone, but in conjunction with the policy of the Department for Business, Enterprise and Regulatory Reform. We did not hear much about the industrial side of our policy today, but Lord Mandelson explained it in his policy paper New Industry, New Jobs, which calls for the development of industries such as biotechnology, high-tech manufacturing, green technology, advanced materials and carbon capture and storage. The Chancellor referred to them all.
	The House should welcome the emphasis on new industries and the proposals for a 3i-style investment fund. The original 3i fund was set up in 1945, with 10 million of finance, and has since expanded to incorporate 6 billion of assets, including venture capital buy-outs and investments worldwide. The new vehicle, which is putatively an industrial and finance corporation, will be ideal for balancing the demands of industry with those of the banking sector, thus creating equilibrium. I agree with Richard Lambert, director general of the CBI, that the fund should have a financial base of at least 1.5 billion. I am sure that he will welcome the scheme on behalf of the CBI, as should the Institute of Directors, which pressed for it in the first place, and has done since Lord Mandelson was appointed to his high office.
	Only the right hon. Member for Wokingham used the dread word socialism in this august Chamber. We may hear it more later, but he is the only Member to mention it so far. However, I welcome Lord Mandelson's proposals and the fact that his concept of industrial activism and policy accepts that the so-called free market, unfettered, cannot pull the economy out of a recession. We cannot go back to the proposals of the right hon. Member for WokinghamI have a mild obsession with him and his speech. He had the wonderful view that everything should be left to the marketwhich reminded me that when we set up the Financial Services Authority some years ago, he opposed it because he believed that the market should be unregulated. We have moved away from that. The view of the G20 is that a free and unfettered market is not the way forward for an economy. I believe that we have learned the lessons of the 1930s: that message emerged from the G20 meeting in London.
	However, I stress the difference between intervening in a country's economy to give it direction, and interfering in the marketplace. We make a distinction between intervening and interfering. We do not believe in interfering in markets, but they should be given a proper direction, especially in a global recession. We want markets to evolve, with flexibility, in a global environment. The right hon. Member for Wokingham mentioned the European Union, even in the Budget debate. He criticised the Government for allowing a portion of the rebate, which Lady Thatcher negotiated some years ago, to be returned. We must admit that we did that. We paid some of that rebate backwe own up to thatand we did it to help eastern European countries that are much poorer than we are. The right hon. Gentleman said that we gave the money to countries that were richer than us. That is not the case. We gave it to countries that were less rich than us, as part of the European Union concept. In order to deal with the irrational exuberance of the markets that has led us to the predicament that we are in, we need the economic and industrial activism that we have now heard about.
	I want to refer to the north-east of England. My right hon. Friend the Member for Edinburgh, East (Dr. Strang) referred in his speech to the situation in Edinburgh. We have to look at where we are in the north-east. Let me start with our steel industry. Although we accept the concept of a new economy, with biotechnology and the way in which environmental issues affect the economy, we must not overlook the fact that steel was once the backbone of the north-east of England, along with coal and shipbuilding. Teesside Cast Products is a producer of steel on Teesside. The plant reduced output by 30 per cent. at the end of last year to safeguard jobs in the short term. At present there are talks between management and unions to revisit the company's cost structures.
	In their overall Budget strategy and their emphasis on new industries, the Government must not overlook traditional industries such as steel which provide work and which, in some cases, are the backbone of the local economy on Teesside. I fully accept the Government's position that subsidising wages in any sector during a downturn would be untenable. Rather, the emphasis is, and should be, on youth employment schemes and on getting young people who have lost their jobs back into work as quickly and efficiently as possible.
	The Secretary of State for Business, Enterprise and Regulatory Reform and the Prime Minister were in Loughborough on Monday making important speeches that set the background for this Budget. The Prime Minister said that we have to ensure in the present recession that a time of crisis is a time of opportunitythose are my words, not his. We should use this opportunity to make our economy more competitive. Such competitiveness lies with the development of a skilled labour force, transport infrastructure and innovation.
	On infrastructure, building on the Prime Minister's speech on Monday, as well as the contents of the Budget statement, I invite the Government to take on board the proposed Tees valley metro scheme. It is a project that would put 30 million into improving our rail network on Teesside and would underpin our planned regeneration at this time of recession, with a 50 million investment in the Darlington-Saltburn line and a 130 million investment in the Hartlepool-Nunthorpe line, a major infrastructure project in keeping with the Prime Minister's thoughts this Monday.
	The Government can make a start by sorting out who pays the 1.5 million for design work that could be included in a regional programme and the appropriate appointment of a senior responsible owner. Both matters have been discussed with Lord Adonis, the Transport Minister, and would be fully in keeping with the aim of the Budget, in maintaining our competitiveness, strengthening our infrastructure and ensuring that Teesside remains an attractive venue for business.
	I would like to touch on the scrappage dealbut first I welcome you to the Chair, Madam Deputy Speaker; you came in silently, but it was noticed. Talking of Teesside, I welcome the proposed scrappage deal, although I would have preferred a more elegant title to describe the proposal. I am reminded of a comment that the Leader of the Opposition made in his speech. He castigated the proposal and called it everything under the sun, but his comments were churlish, curmudgeonly and not thought out.
	In my area in the north-east of England alone, there are some 2,000 workers who work in car dealerships. They will be very grateful for the so-called scrappage deal, which gives a 2,000 discount for trading in cars more than 10 years old. The scheme has worked in France and Germany. Just to amuse the right hon. Member for Fylde, who produced a copy of an editorial this week from the  Financial Times, I can say that I agree with Brian Groom of the  Financial Times that scrappage deal is not a very good name for the scheme. He said that it should be called a car scrapping dealbut you have to say that very carefully, Madam Deputy Speaker, because it could come out in a different form, with different connotations; I will leave it to  Hansard to work out what that might be.
	In one car dealership in Middlesbrough aloneJennings of Middlesbroughthere are 470 people who work there, and throughout the north-east. It invests in the latest equipment and it services and maintains our cars and vans. This helps to make our small and medium-sized enterprises viable. Anything that helps such businesses to continue, including the scrappage deal, is welcome. I predict that while it is available, it will have the same impact as the similar schemes in France and Germany, and that the 30 per cent. loss of sales by car dealers will be rectified. We should not overlook the fact that our car dealerships play their part in the local community. They are, for example, investors in local charities. This will be a welcome proposal for them.
	We heard a brief reference earlier to how VAT had been reduced by 2 per cent., and how that measure was time-limited, as the car scrappage deal will be. However, the Centre for Economics and Business Research has shown that the VAT reduction has boosted retail sales this year by 9 billion. So it has had an impact, and that will continue. I promise that I will make no further reference to the right hon. Member for Wokingham after this onebut he mentioned the green shoots of recovery, a phrase that goes back to Lord Lamont. It is, of course, metaphorical, as are such phrases as stepping up to the plate and throwing a curve ball. These are all part of our literary debate in the Chamber, and they widen the debate on economics and finance.
	The Group of 20 has met in London, and global measures have been announced. We are using the lessons learned from the depression of the 1930s. It is a measure of our times that the following statement by David Miles, the newest member of the Bank of England's Monetary Policy Committee, was to be found in a paragraph tucked away on the inside pages of a local newspaper:
	Economic history teaches us that a combination of tax cuts...cuts in interest rates and more quantitative easing is likely, with a certain time lag, to have a substantial impact on demand in the economy and it may well be that the worst of the recession may well be behind us.
	He went on to say that that was
	not a confident prediction but a judgment about what may be the case.
	It is certainly the case that the Opposition will have a field day with regard to the time lag, but trying to invest several billion pounds in an economy takes time. The Conservatives might make hay while the sun shinesto use another metaphorbut in the long term, the proposals will work.
	I want to refer to the north-east again. Figures from the Royal Institution of Chartered Surveyors show that house sales in that region have increased for the third consecutive month, and new inquiries have increased for the fifth consecutive month. I must contradict my right hon. Friend the Member for West Dunbartonshire, who talked about the demise of the Royal Bank of Scotland. It has 170,000 workers, and data provided by the bank for studies in the north-east show that following a reduction in private sector business in March, the level of the reduction has eased markedly. Things are moving in our area.
	Much has been made of the public deficit amounting to 11.9 per cent. of national income, and of the need to reduce it over the medium and long term, but nations that have paid for warsand world wars, at thatwill not have any difficulty in easing their deficits when the time is right, when recovery is well established and there are no sudden lurches. That is, I believe, the essence of the Budget. When President Clinton came to office, he had to deal with the mighty deficit left to him by President Bush senior, but his Administration overcame that. To please my hon. colleagues on the Conservative Benches, I will also mention Lady Thatcher. We fought the election in 1983 with 3 million unemployed. She brought public spending down from 48.1 per cent. of national income in 1982-83 to 41.6 per cent. in 1987-88. As I said earlier, I fought that election with 3 million people unemployed.
	To come back to the point made by the hon. Member for Esher and Walton, the idea of an election seems to haunt this Chamber. Every Opposition Member seems to be obsessed with a general election, but whenever it comes and whatever the outcome, it is not relevant to this debate. What is important is that the Government of the day take the measures that they must, to see the country through the recession.
	The right hon. Member for Fylde mentioned the need for a debate on what kind of country we are economically, and I would welcome that. If one ever wanted to know what the Conservative philosophy was, it could be heard from the right hon. Member for Wokingham. If he has his way, our public sector and our banks will disappear, the EU will descend under the North sea and we will all be happy citizens of the realm.

David Maclean: It is always a pleasure to follow the hon. Member for Middlesbrough (Sir Stuart Bell). At the end of his speech, he said, We will ask the Opposition which section of the community will be afflicted by any cuts they may make in the future. It is not for me to attempt to answer that 12 months before an election; no doubt my right hon. and hon. Friends will set out our plans in detail. I simply say that today's denial Budget has afflicted every single section of the communityevery single man, woman and childwith borrowing and debt that will last for generation after generation. That is my only criticism of the hon. Gentleman, who made an excellent job of trying to defend, in the best possible wayhe is an expert at ita Budget with which I think he is slightly uncomfortable. Despite his partial praise and partial criticism of my right hon. Friend the Member for Wokingham (Mr. Redwood), I detected a deep unease in the hon. Gentleman's views on the amount of borrowing that this country will undertake.
	The hon. Gentleman said at the start of his speech, We are in a global recession, we are not in this alone and we can't judge the measures that the Government are taking in this country without looking at what is happening in China, Brazil, India and other far east countries. I agree, but are any of those countries seriously going to go on a massive Government spending spree in the hope that Government can buy their way out of bankruptcy? Those countries will be freeing up their private enterprise and their economies, not adding to paternity pay or health and safety regulations. They will use private enterprise to get them out of the hole. I will return to that subject later in my speech.
	I also agree with the hon. Gentlemanand the Prime Minister, if he said it this weekthat a time of crisis is a time of opportunity. However, it is not an opportunity to borrow 175 billion next year, then 173 billion, then 140 billion, and it is not an opportunity to put us deeper into debt than at any time in our history, and it is not an opportunity to have more debts than every other Government since this country's history began. It is a time of opportunity to cut regulation and red tapesomething my hon. Friends and I have wanted to do over the past 10 years.
	I suspect that it is more difficult to cut some of the nonsense in a booming economy: why cut health and safety regulations and the plethora of red tape when we can afford themas well as lots more civil servants, local government and health and safety inspectorsand when industry is making a fortune and paying its taxes? When we are in a hole, it is time to stop digging and to stop strangling ourselves with red tape and regulation.
	As I listened to the Budget statement, I was reminded of a film. Many years ago, there was a Carry On film called Carry On Regardless. That is what we had in the Budget. In some ways, it reminded me of the Prime Minister's Budgets in 1998 and 1999, when he could carry on the expenditure levels that are now no longer sustainable because of the golden economic legacy that he had been left by the outgoing Conservative Government.
	We have had no sense at all today that the Government understand the urgency of making cuts in non-essential Government expenditure. I do not think that my right hon. Friend the Member for Wokingham was suggesting in the slightest that any front-line services should be cutnone of us is suggesting thatbut as I go round my constituency I get the same message from everybody from every side. They say exactly the same thing: When can we get rid of this Government? Goodness me, I don't envy you lot the job you will have to do. The mess you will have to sort out is terrible and there will be pain.
	The people out thereour electorateknow that there will have to be cuts in some services. They are doing that themselves. They cannot go to their bank manager and say, I'm absolutely broke, but can I borrow more money to spend my way out of bankruptcy? Every little business in my constituency is pulling in its belt. Yes, those businesses would like to invest and they are saving every penny they can for proper investment. They are not squandering a single penny.
	When I open the pages of my local newspaper, I may see a little advert as Eddie Stobart wants a driver. I may see an advertisement saying that a hotel wants a chef. I see columns of advertisements placed by the district council, the county council and the health service, which is still recruiting like nobody's business. I am not talking about front-line staff. Five-a-day managers are being recruited. These people will not be managing anything; they will be paid about 23,000 a year to go around exhorting the rest of us to eat five portions of fruit and vegetables each day. No doubt eating five portions of fruit and vegetables is jolly good for us, and I try to do it myself occasionally, but the idea that it is essential to recruit people to carry out these exhortations is bananas.  [Laughter.] Yesand apples, broccoli and leeks as well. That was an inadvertent one, although I sometimes throw them in to check that the House is alert.
	The idea that we can afford, at the present time, to continue that sort of extravagance is absolute nonsense. I was about to say pie in the sky, but that would have been the second portion. We cannot afford to do that in the current circumstances. We could not afford to do it in the past, but Government and local government could get away with it because we seemed to be earning, we seemed to be paying our way, and we were in a boom period. Now the bust is here with a vengeanceand when the bust is here with a vengeance, we all have to pull in our horns. We invest in what will actually help us to escape from our problems, which is growth. That means that we must cut the red tape and all the things that slow down our industry.
	The Chancellor says that in a couple of years' time we will have 3.25 per cent. growth. No one in the House believes that. Labour Members have made a good fist of defending the Budgetno doubt they received their briefing and found all the good things that it is possible to defendbut no one seriously believes that we will move from negative growth of 3 per cent. to positive growth of 3.25 per cent. in a couple of years' time.
	If that were to happenif we were to achieve that 3.25 per cent. growthwhere would it come from? Would it come from Government expenditure, Government investment in infrastructure, or Government investment in so-called front-line services? Of course not. Government are not going to create that growth. If we end up with 3.25 per cent. growth in two years' time, it will be because private industry has created it. The investment that private industry will put into its business is infinitely greater than anything that Government can spend by borrowing hundreds of billions of pounds. If those hundreds of billions were to go into capital investment and increasing productivity it could be justified, but much of it is going into shoring up the current account and continuing the profligate expenditure policies that got us into this hole.
	This is my main criticism today. As elections approach, Governments are often accused of jam tomorrow. Well, this Government is promising pain in a couple of years' time rather than inflicting it now. I am quite pleased about that for political reasons, because I know that my constituentsand, I suspect, those of most other Memberswill see through this Budget and say Ah yes, a tax cut. The huge tax increases will come in two years' time. The Government might have gained more political mileage today by giving us some of the pain now: by being absolutely honest, and saying, We must rein back on excessive Government expenditure, and we must rein back on it now. Delaying the pain for a couple of years fools none of the electorate. Indeed, I suspect that it will mean a few more seats for my party at the next election.
	I believe that there are areas of expenditure that can safely be cut. I am not going to come up with a full shopping list, and this is not a Conservative party shopping list; it is just a list of some of my pet fetishes. We are going to waste 12 billion on identity cards, which are absolutely unnecessary. We have wasted 36 billion, I am told, on NHS computer systems which do not work. Thank God they do not work, because I do not trust this Government with my medical recordsparticularly if they introduce a euthanasia Bill shortly, given my current state of health. We do not need that particular investment. In fact, it is not investment. Buying 36 billion-worth of computers for the NHS so that, theoretically, all the medical records can be in a central system and, theoretically, everyone in Whitehall can access them is not investment, but an absolute nosey parker's charter and a waste of money.
	Let me also suggest that the Government cut the 300 million that has been spent, either at Cheltenham or somewhere else, on monitoring all our trips abroad. I am quite happy for MI5 and MI6 to recruit a few thousand more workers to gather intelligence to find out who the real terrorists are, but not for 300 million to be spent so that every time every single citizen of this country goes abroad full details of their passport, where they are going, the hotel they are staying in and, no doubt, what they have had for breakfast is logged on a central computer on the off-chance that we pick up some guy going to Pakistan for terrorist training. Let us put the money and investment into more Security Service foot soldiers on the ground infiltrating these communities, and into hearts and minds operations in those communities and gathering intelligence on the half a dozen guys who may be going to Pakistan to learn to be terrorists, rather than into monitoring the other 56 million of us and intercepting every e-mail we produce.
	We have got to start unscrambling the tax credit system and put in place a better system. I wonder how many of us as Members of Parliament could lay off half a secretarynot that I am suggesting we want to do soif we did not have to deal with the absolute mess of the tax credit system and the child tax credit system. We must tackle the burden of public sector pensions as well, including our ownI suspect it will be the next Government who will have to tackle that.
	We have had a lot of measures on jobs today. They are well intentioned and well meaning, but the people in my constituency who have lost their jobs are not all waiting to be retrained into a new industry. The 30 or 40 men who have lost their jobs in a plasterboard factory get laid off every recession; they are waiting for that work to pick up again, and then they will be back doing the same job in the plasterboard factory. The HGV drivers who are laid off at the moment are not going to retrain for the new green economy and start driving green cars; they are waiting to start driving their lorries again, carting goods around the country. What is needed to help them is not some of the gimmicks we have had today on new training, but a cut in national insurance. If we cut national insurance, I can guarantee that within weeks more people in my constituency will be back in employment, because it is a burden on employers which encourages them to lay off labour and does not encourage them to take on new employees.
	I agree with the Prime Minister that a time of crisis is a time of opportunity: when the Conservatives come into government, there will be an opportunity for my Front-Bench colleagues to take an axe to some of the regulations that have been passed in the past 10 years. That opportunity will come because the people of this country realise that we cannot have more and more read tape strangling private industry as it is only private industry that will get us out of this crisis.
	I seldom watch television, but I caught a bit of a programme the other night. I believe one of our esteemed Gallery correspondents was responsible for it: Mr. Quentin Letts. The programme was certainly infinitely better than anything he writes, and it was all about training for using ladders. Mr. Letts had discovered that everyone in this country who may have to go up a step-ladder now has to get a certificate on handling ladders and using them safely. I understand from Mr. Letts's programme that the European Union regulations are about two pages long, whereas the British Government ones are about 30 pages long. That is typical of the gold-plating on every regulation.
	My right hon. Friend the Member for Wokingham may have a view on which regulations may be scrapped. I take the view that while we are in the European Community, and we areand rightly sotrading and working with our partners, we must obey European law. If we have British regulations duplicating those from Europe, we cannot get rid of the European ones; therefore, we should scrap all those duplicating regulations that we in this country pass in gold-plating the European standard regulations. We have such a problem with the working at height regulations, and in this place we are doing it with the fire regulations: we as a House and a British Government are gold-plating them, and nowhere else in the European Community is that being done.
	Before this is misconstrued as Maclean suggesting that we should go back to the bad old days before the Health and Safety at Work, etc. Act 1974 and scrap all the vital safety regulations that protect workers, let me say that I am not suggesting that in the slightest. If we look at the statistics, however, we will see that we are putting a lot of effort into targeting some areas where there are very few accidents or deaths, while ignoring other areas, such as the construction industry, which are still high up the accident league. Whatever we do, we must take the burdens off private industry, where one finds the only ones who will create the magical 3.25 per cent. growth that we seek.
	I wish to make one other major point before I conclude, and it involves contradicting what I have just said on cutting regulation. One regulation is essential, and it is not a matter of the regulation that may be necessary for the Financial Services Authority to determine whether or not the institutions are lending properly. It is the imposition of a new regulation or code of practice on our banks, which are turning the screws on all our businesses and individuals like never before. Every business man and woman in my constituency to whom I have spoken, including someone who I bumped into in London last night, has made the point that they have had letters from their bank saying that because of the change in interest rates their terms are being revised and charges on companies are being increased. As Bank of England rates get lower and as we pump more and more taxpayers' money into some of these wicked banking institutions, all they are doing is taking the taxpayers' money and then extorting more from the businesses to which they are supposed to be lending.

David Davis: It is a great pleasure to follow the hon. Member for Brent, North (Barry Gardiner). Listening to him reminded me how much I used to enjoy his philosophical excursions when he served on the Public Accounts Committee under my chairmanship. They may have been philosophical excursions, but they were always useful and reminded us of what was important. He did that again today with his reference to world ecology as well at the world economy.
	That being said, I suspect that this Budget will be judged on a rather simpler basis. When the economic historians look back on itit will be to them that we will have to look, because I am sure that the economic journalists will give it hellthey will consider a principal, objective aim: whether it gets us out of this recession. It will be as simple as that, and all the complexity of the numbers should not obscure that. Those economic historians will probably look back on what preceded the Budget as a decade of delusion; that is probably the simplest way of putting it. There was self-delusion on the part of the Government in many ways, ranging from the way in which they introduced creative accounting into our national accounts and fell for their own propaganda in so doing, right through to the hubris of believing that they had put an end to boom and bust. All of that was self-delusion, and it has lasted a decade.
	There is also the self-delusion of the bankers, who created instruments that they told us would minimise risk, but in fact simply concealed it. That led to the maximisation of that risk, which, of course, is what broke the system in the final analysis. There is also the self-delusion of the professionsthe accountants and the credit-rating agenciesthat failed. It was a criminal failure in my judgment, and I say that not in hyperbolic terms. I mean a literal criminal failure to protect the public from the misrepresentations that were visited on them, both by the public sectorthe Governmentand the private sector.
	I will leave it to colleagues to enumerate the massive overspends, false forecasts, incredible levels of debt, and debt burdens that have been visited on us as a result. I want to focus, briefly, on the consequences of those delusions for the set of policies that were explained to us today, and on the likely effectiveness of those policies.
	A few weeks ago in the Chamber we debated the Government's response to the banking crisis and, in particular, one of the delusions that they wanted to maintain in their response. They wanted the public not to recognise the size of the problem early on. Look at the delays that they undertook in responding to Northern Rock and to all the other problems that they had to face. Why did they do that? Because to recognise those problems was to shoulder the burden of responsibility for them.
	So the Government took a route that was probably most like the route taken in the 1990s by the Japanese Government who faced a similar sort of problem and colluded with their banks to cover up the size of the problem. Contrast that with what the Swedish Government did, also in the 1990s. The Swedish Government forced into the public domain the size of the problem, forced the banks to recognise the liabilities that they faced, forced the shareholders of the banks to face those liabilities, and then stepped in, cleaned up the mess, sorted out the banking system, and underwrote the depositors. Within three years they had their economy back on track. By contrast, Japan 20 years later still does not have its economy back on track.
	I am afraid we are on a Japanese trajectory rather than on a Swedish one. Government action has not been seen to resolve the problem of the banking crisis. That has, as I shall explain, some pretty sizeable implications for their policies today. The IMF stated in its report yesterday:
	Systemic risks remain high and the adverse feedback loop between the financial system and the real economy has yet to be arrested.
	That is the problem that the Government face. It is time for them to get a grip on that banking problem, make the banks face the losses, end the tripartite system and replace it with a Bank of England control system.
	My right hon. Friend the Member for Penrith and The Border (David Maclean), who spoke briefly, made it clear that there has been a major regulatory failure. In responding to his comments about the behaviour of the banks, I would say that we have seen a distinction between large quantity of regulation and a high quality of regulation. The failure has been a quality failure in regulation. We used to have a very good Governor of the Bank of England control system that was subtle and able to respond to delicate signals and unforeseen problems when they came up.
	That is the nature of the problem. The most obvious short-run effect is the problem that my right hon. Friend raisedthat banks have been in receipt of vast quantities of public money, which has been used to improve their balance sheets and not to improve the prospects of their customersa point that the hon. Member for Brent, North characterised perfectly when he highlighted the contrasting aims and purposes put upon that money given to them.
	That is one consequence, but there is another. There is a confidence effect. The way the Government have approached the banking crisis leaves a massive gap in commercial confidence, which in turn has an impact on the Government's own neo-Keynesian strategy. The House will not be surprised to know that I am not entirely comfortably with neo-Keynesian strategies. I think they are over-rated and pose a major series of problems, but let us for a moment accept the Keynesian analysis. Let us accept what it sets out to do, and see what the banking crisis has done to it.
	When Keynes first characterised his policy as a policy of effective demand management, it rested on the idea of the Keynesian multiplier. He was not the first person to talk about it, but he was the first person to popularise the idea. He and a man called Professor Hicks characterised it and demonstrated how it worked. It is very simple. If I spend 1 with you, buying something from you, you will spend a portion of that 1 with somebody else, who will spend a portion of that money with somebody else, and so on, so 1 spent has a ripple throughout the economy. Hicks demonstrated that the algebra was pretty simple. If you spend 90p of the 1 that I spent with you and that works down, every 1 that I spend has a 10 effect in the economy. If you spend 80p of the 1 on average, every 1 that I spend has a 5 effect in the economy. If you spend half, every 1 that I spend has a 2 effect. That is what the algebra demonstrates.
	What happens if one destroys confidence in the economy? If one makes people feel that commercial activity is dangerous, which it was not last year, one destroys the multiplier. We understand from the Chancellor today that the Government have injected some 20 billion, but I guess it must now be 22 billion given the further 2 billion spent, into the economy trying to reflate demand. That is about 1.5 per cent. of GDP, but with no multiplier effect, it is completely irrelevant. The economic demand management policy has been crippled by the Government's failure to solve the banking crisis, but the issue of confidence and its effect on the multiplier was why Keynes rested so much on that policy. The point is that even if Keynesian policy had had a chance, the Government have destroyed it.
	There are other reasons for concerns with neo-Keynesian policies, however, and the primary reason is that spending all that money has a series of effects on the long-term competitiveness of the economy. The most obvious has been discussed today: the long-term impact on tax and borrowing in the United Kingdomand 600 billion is a spectacular burden on our future competitive ability. Before I address that issue, however, I shall deal with one that the Treasury Committee Chairman, the right hon. Member for West Dunbartonshire (John McFall), raised earlier.
	The right hon. Gentleman attempted to argueI think he was repeating Sam Brittanthat there was no limit to the amount that the Government could borrow and no issue about raising the money. He said that such money has been borrowed beforein the second world war. Well, what a devil of a comparison to makethat we borrowed that amount of money during the second world war. He missed the point, however, which was made by the right hon. Member for Birkenhead (Mr. Field), when he simply said that many people wanted us to win that war and, as a result, were willing to lend us a lot of money so that we could continue spending money to win it. We have had high borrowings at other times in our history, but, at those times, sterling was a reserve currency and it is not now. There are other reasons why we cannot compare our current situation to our history.
	Today, we have a real problem: we might well be on a cliff edge in respect of our ability to raise money before we reach the 600 billion limit. One way in which that cliff edge will come nearer is if there is a further decline in our currency, because that would attack the source of much of our borrowing, which comes from abroad. A combination of poor credit worthiness on the part of the Government, an inability to raise taxes to pay the returns and a decline in the currency could have a serious impact on our continued ability to raise money.
	That brings us to the issue of overall public expenditure levels, because what do the Government do when they cannot raise money? Then, they do not choose to cut; they have to cut. I am aware of only one point in modern timespeacetime, anywaywhen any Government of any persuasion or party cut public expenditure: it was under the Labour party and Denis Healey, because they had to. The International Monetary Fund told him that he had to. No Government willingly cut public expenditure, but it is entirely possible that the strategy that we are in the middle of will lead a future Government, of whatever party, to have no choice but to cut public expenditure, because they will not be able to raise money either by taxes or by borrowing. That is the potential horror story at the end of this situation. I began by talking about how economic historians will see this Budget, and that is the worst scenariothe tragic, potential outcome.
	Although I am not a Keynesian, I am not innately against public expenditure in a downturn. If one goes to America, one will see that much of its infrastructure, from roads to dams, was built cheaply in the 1930s and created an underpinning for that great country's economic success thereafter. If one is going to spend money, a downturn is a good time to do so, whether one is a private or a public citizen. However, we must be very careful about how we spend it, and we must understand what we can and cannot do, and what Governments are good and bad at. Let us be plain: Governments, as we all know, are bad at picking winners; it is not what they do. Throughout history, all Governments who have tried it have failed. At one point in the Chancellor's peroration, I heard him proudly lay out the fact that he was going to invest 750 million in high-tech industry. All I can say is that I will make sure that I do not invest where he puts that money; it is a fair bet that those industries will not succeed.
	The Government should pump-prime and encourage investment, if not provide the whole investment, in areas in which largeoften monopolyindustries underpin other industries. I say to Treasury Benchers that I rather support their idea of improving the status of our broadband structure; actually, what they plan at the moment is rather unambitious. Just as the roads and railways were an underpinning during the industrial revolution, broadband improvement will be an underpinning for industry in future.

David Taylor: Surely expenditure on pensions and benefits can be an investment in the classic sense of the word. It provides a decent level of income that enables people to be properly fed and housed and to engage in social activity. The payback from that investment will be that those people will live longer lives. So there is a payback from such expenditure, which can properly be classified as an investment.

David Davis: The hon. Gentleman demonstrates only too clearly why I think that he and his Government are wrong. I approve of expenditure for such purposes, but we do not have to call it an investment for it to be something of which one approves. He was discussing proper, social expenditure; I talk to him as a social Tory, if he likes. We could go back to Lord Shaftesbury. He called such spending not investment, but social expenditure. It is social welfare, and it is what a civilised society should have. However, we should not kid ourselves that it gives an economic return. It does notit improves our civilisation and the nature of our country, and it enables us to live with ourselves, but it is not an economic investment. That is my point.
	One issue of competitivenessI am sure that Labour Members will entirely disagree with me on thishas worried me for some time. Incidentally, it also worried Keynes. If one goes back and reads Keynes, there are some interesting parts where he discusses reparations after the first world war. He was critical of the reparations that we imposed on Germany for a number of reasons. Some of those were moral and ethical, but he also said, to paraphrase, If we put this burden on Germany, Germany will grow strong in having to pay this burden; we will grow soft in living off this burden. He was talking about the work ethic in our respective societies. In the famous Keynesian example of the state paying a worker to dig a hole and then paying another worker to fill it back in, he was talking about not only effective demand but the need to maintain the work ethic in British society to ensure that when idleness is forced on people, that does not enter into their soul and institutionalise the unemployment that arises from major recessions.
	I worry about the work ethic in British society. When I looked up the numbers in this morning's publication, I found that there are currently 7,851,000 economically inactive citizens in the United Kingdom. That figure is not quite as shocking as it sounds, because about 2 million are students, a couple of million are people raising families, and so on. What is interesting is that over the course of the past decade the number of people who have determined that they do not want to work has gone up these are round figures; it has bounced around a bitby between 500,000 and 600,000. Half a million people in our adult working-age population have decided that they do not want to work. We often see anecdotal evidence of people refusing work. A lot of the arguments about immigration have focused on the fact that people who come into this country are doing jobs that British citizens will not do.
	That is worrying in terms of the nature of our society, which we were debating earlier, and our long-term competitiveness. We have to think very hard about the whole welfare structure of our society. I am pleased that the Financial Secretary is on the Front Bench, because I know that he takes an interest in this. I have been backwards and forwards on this argument, but I am beginning to think again that we have to reconsider workfare. If the forecast is wrong and we end up having a long recession, we must ensure, first and foremost, that that does not visit habits of idleness on our population. I am happy to hear the Chancellor speak about action to help the young, but it is not just about the young: we are talking about a much bigger sector of the population, particularly in some of the old industrial areas near where I live and where I come from. We do not want to allow such habits to take hold in those areas. The economic historians will answer these questions on the basis of whether we come out of recession, which is all about growth.
	On taxation, everybody in this House knows that I am a low-tax Tory and that I would like to see lower taxes. I am not going to pick a fight with the Government over having a 50 per cent. top rate for those earning 150,000 a year or morefrankly, in terms of the argument, I do not care too much one way or the other. However, the independent Institute for Fiscal Studies has said in terms that a 45 per cent. rate would not deliver any more moneynot a pennyto the Exchequer. Therefore, if that is the purpose, it will fail. What is more, it carries the riskwe do not yet know how big it is, because it depends on what other countries dothat people of talent will not come here. It is fashionable now to decry Ireland, but for 25 or 30 years Ireland has had a fantastic success story. One of the key parts of that was ensuring that talented people came to Ireland and had good tax arrangements in doing so. I suspect that if the Scottish Parliament had control of its own destiny it would do the same. That is why I am in favour of tax competition. There is a real risk that in doing something that is designed simply as a trap for the Tories, which is what it is, the Government may harm our long-term economic prospects.
	My right hon. Friend the Member for Penrith and The Border mentioned regulation, and he is absolutely right that that is the real impediment to employment growth in our economy. The reason why I specify employment growth rather than GDP is that the big generators of employment are small businesses, and those are the ones that suffer as the result of regulation. Big businesses have no trouble. I used to be a director of Tate  Lyle, and we had departments designed to deal with employment regulation and to maximise the amount of money that we got out of the Government in grants here, there and everywhere. We had departments and specialists for all those things, and the regulation was no impediment to us. In fact, it was an advantage because it got other people out of the business. Others did not have those departments, so it was a competitive advantage to us. That is exactly what regulation should not do, but it is what it does.
	I shall give an example. We will all have seen vans going around near here with Pimlico Plumbers on the side.

Jeff Ennis: There is no doubt that this year's Budget has proved to be the most difficult Budget for this Government since we came to power, primarily because of the global economic crisis that this country finds itself in, along with a lot of the other westernised developed countries.
	I for one welcome a lot of the measures in this year's Budget. Indeed, I would like to emphasise one or two of them that I particularly support. They include the extension of the stamp duty holiday on properties sold for less than 175,000 until the end of the year. In contrast to what was said by the hon. Member for St. Albans (Anne Main), who is no longer in her place, that will affect the vast majority of property sales in my constituency and will have a good knock-on effect on future property sales. Likewise, I certainly support the increase of the higher rate of income tax to 50 per cent. for people with salaries of more than 150,000, which comes in next year. I also support the increase in funding for the digital industries, which has the potential to create many jobs, both directly and indirectly, particularly, I hope, in south Yorkshire.
	Let me look at the social side of some of the policies contained in the Budget. I also welcome the increase in statutory redundancy pay from 350 a week to 385 a week, and the retention of the increase of the winter fuel allowance, which is worth 250 for pensioners over 60 and 400 for pensioners over 80, for another year.
	That leads me to the first omission of something that I would have liked to see included in this year's Budgetsomething that I have been pushing for with both the Department for Work and Pensions and the Treasurywhich is the abolition of the so-called 25p age addition for pensioners over 80. It is nonsense that pensioners get an increase to their state pension of 25p, which has remained at the same level since 1971, when the Heath Government introduced it. In 1971, someone could buy a dozen eggs or a pound of cheddar cheese with 25p; now they could not even buy a second-class stamp.
	The Government have introduced some good initiatives for older pensioners, such as the winter fuel allowance. I would like the 25p age addition scrapped, and 25 or 50 to be put on the winter fuel allowance. This is primarily because a third of all pensioners over the age of 80 in this country now pay income tax, so they are effectively paying income tax on that 25p increase. If the increase were added to their winter fuel allowance, however, it would be a capital allowance and they would receive the full benefit of the increase. The net cost to the Treasury of making that change would be 15 million a year, which is peanuts. It costs 35 million to pay the 25p a week. To add 25 a year to the winter fuel allowance for people over 80 would cost 50 million, and that would be 50 million well spent. It would be well received by the pensioners of this country.
	The next issue that I want to focus on was brought to my attention by a constituent of mine just before Christmas. It concerns the level of taxation on statutory redundancy payments. I should like to quote the e-mail that I received from my constituent, Mr. Nicholas McIvor from Great Houghton, because it hits a number of buttons that have been touched on earlier in the debate. The e-mail is dated 12 November, and it states:
	Dear Jeff...I am writing to you as a 'soon to be' unemployed civil servant. I work at the Pension Centre in the Dearne Valley which will close just before Christmas. I will be receiving a Statutory Redundancy Payment but anything above 30,000 is liable to income tax at the highest rate. I understand this tax limit was raised from 5,000 to 10,000 in 1978, to 25,000 in 1981 and to 30,000 in 1988, but it has remained at that level for the past twenty years. I am hoping to use my payment to set up in business and if the Government is looking to stimulate the economy, would it not be better if the 30,000 limit was raised as it seems to be well overdue?
	The reason I say that that hits a number of buttons is that the right hon. Member for Wokingham (Mr. Redwood)who, unfortunately, is no longer in his placesaid that the private sector was bearing the brunt of the redundancies and job losses. That is not the case, and the sooner Conservative Members can get away from the notion of private sector, good; public sector, bad, the more it will be to their benefit. As far as I am concerned, the people who work in the private sector, the public sector and the third sectorthe charitable sectorare all serving UK plc to the best of their ability. That is what we should be more concerned about. We need to continue to invest in jobs in the public sector in order to maintain that sector, because a lot of the small and medium-sized enterprises that are struggling to survive are dependent on their contracts with local councils, with the NHS and with quangos to sustain them. This idea of private sector, good; public sector, bad is a false notion that we need to get away from.
	Incidentally, there is a good news story attached to that e-mail, because within weeks of being made redundant, that gentleman found alternative employment. That proves the success of what the Government are doing through Jobcentre Plus, through the regional Government officeswe have a very good chief officer in the Government office for Yorkshire and the Humber, Felicity Everissand through the regional development agency, Yorkshire Forward, whose chief executive is Tom Riordan. They are doing a fantastic job of finding alternative employment or job opportunities for people who are being made redundant, particularly in industries such as the financial sector in West Yorkshire.

Stewart Hosie: We shall have to do the sums later. I am trying to do the mental arithmetic: 1.6 trillion divided by 26 million households. May I ask the hon. Gentleman to intervene again in a few minutes once he has worked it out? That would be great.
	The 1.6 trillion figure makes the time before the recession, when there was a national debt of nearly half a trillion, seem almost like a golden age of prudence. The problem is, however, that it was not. It was a housing boom built on a credit bubble. There was too much money in the system early in the cycle, and too much debt at the end of it.
	We are responding today to a Budget statement from a Government who saw a million manufacturing jobs lost on their watch before the recession started, and 30,000 factory jobs lost every month since then. That makes it worse that the 500 million that they are trying to cut from the Scottish budget may undermine the vital efforts to save jobs and stimulate the economy in Scotland. Although unemployment there is lower than it is in the United Kingdom, and although employment is higher and economic inactivity rates lower, there has been a rise in unemployment as part of the rise to 2.1 million in the United Kingdom. There was a record rise of 138,000 in February, and 177,000 people became unemployed in the last quarter. That means that 2,000 people a day became unemployed under Labour in the last three months.
	Those are frightening figures. We must not allow anything to happen that would undermine the ability to invest in a recovery, and in particular, to create jobs. However, it is difficult to see how many of the proposals in the Budget would do anything to create the million or so jobs that we need. Even today's measures to create green jobs, which I welcome, I am treating with some caution, particularly the announcement about carbon capture and storage, and some of the other green measures.
	As the Minister will know, we have heard much of this before. In the 2005 Red Book, the then Chancellor, now the Prime Minister, said that the Government must examine
	how it might support the development of CCS In The Climate Change Programme Review.
	In his pre-Budget speech in the same year, he said:
	Carbon capture and storage protect the environment from carbon emissions by containing them at source.[ Official Report, 5 December 2005; Vol. 440, c. 612.]
	In the 2006 Budget, he said:
	Following a joint study with the Norwegian Government, we have found that carbon capture and storage in the North sea can reduce emissions...by 80 per cent.[ Official Report, 22 March 2006; Vol. 444, c. 294.]
	In the 2006 pre-Budget report, he repeated and paraphrased that statement. In 2007, he said:
	The Secretary of State for Trade and Industry is announcing today that Britain will launch a competition to go ahead with our first full-scale carbon capture and storage demonstration.[ Official Report, 21 March 2007; Vol. 458, c. 821.]
	On 27 February 2007, the then Minister for Science and Innovation said:
	The pre-Budget report committed to making a decision this year, and I am advised that it is not incompatible with the Miller field decommissioning time scale.[ Official Report, 27 February 2007; Vol. 457, c. 246WH.]
	On the same day, the Secretary of State for Scotland said in the Chamber that the Government would make a decision within months. On 23 May, following the Government's inability to make a decision, BP pulled out of the 500 million project at Peterhead, and the investment went to Abu Dhabi.
	As Ministers will appreciate, we will look closely at the small print of the CCS proposals. Perhaps we will be told at some point how much money will be available, what the time scale will be, how the arrangements will work, whether there will be a consultation, and if so, when it will be launched. My colleagues would be delighted to hear the details.
	It is difficult to see how the Budget will do anything to remedy the fact that according to the CBI's assessment, not only is cumulative output forecast to fall by 4.5 per cent., but manufacturing output is forecast to fall by 10 per cent. and investment to fall by 9 per cent. Given those figures, how on earth do the Government expect us to believe that we will be in recovery by the end of 2009?
	I said at the outset that the Government were out of touch, and I think today's statement confirmed that. Last November they said the national debt would rise to 1.2 trillion; today they confirmed that the figure was 1.6 trillion. They said that the economy would be 78 billion in the red this year; we were told today that that sum is now 90 billion. We were told that the Government would have to borrow 300 billion over the next three years; we learn today that they were out by 138 billion. Governments used to be accused of being at sixes and sevens; I think this one are at billions and trillions, because that is how far out they are in their forecasts.
	The Government's other dirty little secret is the private finance initiative. We assessed last year that the taxpayer's PFI liability had increased by 30 billion merely in the six months between the Budget and the pre-Budget statement. Today's Budget shows that up to 2033 the taxpayer liability remains over 200 billion, at 204 billion, much of it off balance sheet.
	It is true that reduced demand has driven down the price of oil, but according to today's figures, the North sea will still generate 45 billion in revenue for the Treasury over the next six years, compared with 41 billion in the six years between 2002-03 and 2007-08. However, given that the Budget forecast is based on a price of $46.7 a barrel, whereas Merrill Lynch has forecast $62 a barrel for 2010, and delivery prices for 2015 are already sitting at $80 a barrel, the real price and revenue yield is likely to be far higher. Those future prices confirm that the Treasury will continue to take a great deal of money from the North sea, but they also indicate underlying inflationary pressures, which risk worsening an already appalling trade deficit as the costs of essential imports rise. Even with a 15 per cent. fall for the pound against the euro since last summer and a 25 per cent. fall against the dollar, today's Budget forecasts, and the forecasts published in the last week or so, show a staggering 44 billion balance of trade deficit and an extraordinary 93 billion deficit in the trade in goodsall the more reason to have a proper manufacturing strategy as soon as possible.
	Today the Chancellor commented on many of the Government schemes designed to kick-start the economy. Many are not yet up and running; some, like the enterprise finance guarantee scheme, have been the subject of complaints around the country; others, like the VAT cut, have saved less than half the number of jobs that direct capital investment could have saved. However, having put those schemes in place, and having lauded President Obama for his stimulus package, we now find that the Government are intent on doing the opposite of what they were trying to persuade the rest of the world to do, by making a 15 billion cut next year, including a 500 million cut in Scotland.
	At a time when the state of Maryland, whose population is a similar size to that of Scotland, will receive 2 billion extra to spend, mainly in 2010, in fiscal stimulus, this Government are planning to cut investment, which is the wrong thing to do in the teeth of a recession. Indeed, the 15 billion cut will take more out of the economy than the VAT stimulus put into it. Therefore, the Chancellor is risking delaying the start of the recovery and making that recovery more painful than it might be. I do not want anyone to misunderstand me: I think that belt tightening is essential. The year-on-year efficiency savings of the Scottish Government represent the right approach. We must squeeze every ounce of value out of every public pound spent, but in the teeth of a recession, with unemployment rising and output and productive capacity down, we cannot risk undermining efforts to restart the economy anywhere in the UK.
	I do not expect the Government to listen to me or take my word for it, but they should listen to the Scottish Trades Union Congress. Its general secretary, Grahame Smith, has said:
	Cuts in funding for vital public services would be a disaster which Scotland's communities will feel for many years to come,
	and he is absolutely right. The Government have failed to take any responsibility for the economic mess, and bits of this Budget might compound that error, make recovery more difficult, stifle business growth and hit hardest the communities who most need help.
	When the Leader of the House says that we cannot cut our way out of a recession, I suspect that at least some people on the Labour Benches might want to listen. When Rhodri Morgan says that the archangel Gabriel could not find such proposed cuts without damaging public services, more people on the Labour Benches should listen. It is not too late to protect jobs and the economy, but I am sure that if the Government are not prepared to take the right steps to continue reflationary tactics and the recovery stimulus now, the electorate will speak volubly in the June elections, and in the next general election, about how the recession should be fought and about how recovery should be progressed.

Alan Simpson: Those are important points, and we are going to have to weigh very carefully the carbon footprint of manufacture. Nothing can be made without a carbon impactthat would be like making an omelette without using eggs. That is the difficulty, and the question that we must resolve is how we make sure that the carbon gain of what we do outweighs the carbon cost. That is a terribly important consideration.
	My worry about the scrappage scheme is that it is very short term; it expires in 2010. It is cash-limited as well as time-limited, and it attaches no conditions to the nature of the replacement vehicle. We had a decade of voluntary agreements with the UK car manufacturing industry between 1997 and 2007, during which time the industry was supposed to reduce emissions from new cars manufactured to less than 140 g of carbon per kilometre. We got nowhere near delivery of that target.
	The successful schemes elsewhere on the continent contain conditionalities that require the replacement vehicle to emit less than, say, 100 g of carbon per kilometre. There are at least eight vehicles on sale in the UK that meet that standard. As I understand it, at least another six will become available this year. It is right to say that green measures will shift us to the consumption of things that tread more lightly on the planet, and away from the consumption of goods that tread heavily on the planet. However, there are no conditionalities built into the UK scrappage scheme proposals that would structurally move us to where we need to be within the next two to three years.
	With green measures, I always think that the most important thing to do is to translate the notion of green or ecology into practical, tangible jobs. Without a doubt, the leader in that field internationally is South Korea. Its stimulus package is around 30 billion, 81 per cent. of which23 billionis to go on green measures. It has set itself some very specific targets. Not all of them will be earth-changing, but they mobilise huge numbers of people. For instance, it is a commitment of the South Korean Government that the lighting in every single public building in South Korea will be changed to light-emitting diode valves this year. More than 1 million light bulbs and light fittings will have to be changed. Every one of those fittings will have to be changed by people who are capable of carrying out the electrical installation. People will also have to manufacture the bulbs. That shift will deliver both jobs and a dramatic reduction in the carbon consumption of all public buildings, and the commitment is that it will take place this year.
	South Korea has also made a commitment to build within the next four years 1 million eco-homes, and a further 1 million existing houses will be refurbished to low-carbon standards. The number of jobs involved in that process is massive. South Korea is using directed public investment, channelled through private providers in the construction and contracting sector, to deliver both economic and ecological transformation. It has a quantitative target for delivering change. My experience of trying to do similar work in countries in other parts of the EU shows that wherever a country runs those practical, targeted programmes, today's unemployed, and particularly today's young unemployed, are desperate to be part of it. They want to be part of the solution to today's problem, rather than be defined as today's problem. We have to address their aspirations in the context of the practical jobs that such a green transformation would bring.
	I was pleased to see in the Government's proposals an extension of the low-carbon buildings programme. It is a small measurea commitment of 45 million to extend the programme beyond its expiry date of June this year. The reason why I focus on that is that, although our Government are committed to introducing feed-in tariffs for renewable energy into the UK energy market hopefully by the end of this year or by the beginning of next, almost all the renewable energy sector was saying to us that unless there was a bridge between the end of the low-carbon buildings programme in June and the start of the feed-in tariff regime at the beginning of next year, the bulk of the industry would die. The reality would then have been that, by the time our Government got round to introducing the feed-in tariff regime, the only suppliers catering for and responding to the regime would have been outside the UK. It is a therefore a huge small relief. The industry that we have, which has survived despite rather than because of Government policy, will at least still be in existence when we produce the real stimulus to shift us to renewable and sustainable energy systems.
	To do that, however, we needed bigger measures in the Budget. At least 100 billion ought to have been allocated to the creation of a green infrastructure bank. Some of the moneys raised from the tax changes that I mentioned earlier could have been used. More importantly, we need to understand that we are currently putting about 50 billion a year into UK pension funds. The difficulty is that those funds are still circulating in pursuit of short-term returns within a speculative and almost paranoic global financial market. We need to give people the capacity to invest in their own ecological future and their own pension security. A green infrastructure bank, underpinned by that sort of funding, would be an essential part of the transformational shift that we must make.
	I mentioned the shift into feed-in tariffs by the end of the year. Some Members of the House may be aware that, somewhat belatedly in my parliamentary career, I have been appointed Government special adviser on the introduction of feed-in tariffs.

Ian Taylor: It was in the red; now it is white. It pretty much says, We're putting up the white flag. We are in a desperate state, and the Government need to admit that they have to take the blame. Having said that, I must say that, although we are in such a bad state to start with, some of the Government's actions during the recession have been sensible. One thing that I give the Prime Minister credit for is his recognition that this is a global problemalthough he got it the wrong way around: he said that he was here to save the world; actually, the world is here to save us. What I mean by that is that the globalised impact that has affected all the advanced countries of the worldand caused collateral damage, of course, in the less developed worldhas shown that we cannot adjust an economy only by taking measures internally. We learned that during the banking crisis. I do not think that the American Government entirely understood what they were doing in allowing Lehman Brothers to collapse. They did not understand that the certificates securitised on the back of the mortgage industry not only involved Lehman Brothers in New York, but were spreadwe still do not know how widelyaround the world. Everybody in the world was therefore suddenly affected by the American Government's decision.
	In a different context, we have understood that it is no good having a currency that falls in value if there is nobody to buy our exports, which would normally have benefited from the situation. In a different context again, the German Government suddenly understood that although they had felt that their domestic economy was doing well, they forgot that their whole economy depended on their tremendous historic success in the export markets; other countries needed to reflate if the German economy was to survive.
	The Government got it right in another way. In a recession, there is a temptationan obligation, almoston the private sector to save, or reduce its borrowing. If that is the case, it is essential that the Government do the opposite; otherwise, the recession will be deeper and longer. The Government stimulus was the right move. The criticism might be that they did not handle their VAT reduction well. The timing was not good because all the Christmas sales were on at the same time, and it was difficult to get a 2.5 per cent. reduction on VAT of 17.5 per cent. across to the public at that stage. However, I suspect that the cut has now begun to stimulate the economy, as certain independent bodies have begun to say. That is a belated bonus.
	The overall stimulus package was right, however. I disagree with what I think the hon. Member for Nottingham, South (Alan Simpson) was saying. Of course it was essential to protect the banking sector, because without it there would not have been ecological activities at any levellet alone the levels that he would like. How we protect the banking sector is a detailed matter, which Select Committees can investigate for weeks on end, but what I am saying is that the Government were right to introduce the stimulus package. That stimulus has been allied to the stimuli that have taken place in other countries. In the end, the stimulus in Germany turned out to represent a bigger percentage of GDP than our own. The American stimulus is an extremely important event. There are criticisms that it has gone too far, and Congress has ample ability to add in a few pork barrel opportunities, which will probably distort the package. Nevertheless, the overall thrust is right.
	The collective effort of the world has been such that I think that we can now see the beginnings of the end of the worst of the recessionalthough sadly, as always, the bad news is still to come out. Unemployment in this country will rise towards 3 million because of the economy today, even though the country may see a turn in its overall economic prospects. Those prospects have changed because there has been collective action around the world, although it has been difficult. As long as the measures agreed are applied in practice, the G20, which is actually the G28 in this sense, was rather effective.
	There is a lesson to which we should pay attention in this country. It is that we are one member of the G28, but things are beginning to change in the world. Washington and Beijing regard the real determinants of how the global economy rebuilds as being down to the G2China and America regard themselves as being the two that determine how it goes. Why is there not a G3? Because the European Union has not been as effective as it needs to be. It will not surprise some of my hon. Friends if I say that it is in the British national interest that the European Union is more effective, because by ourselves, however much we try, we will not make our voice heard within the G28 at the level at which we have traditionally thought that it would be heard. Our influence therefore has to be exerted through a collective role for the European Union in what would then genuinely become a G3 rather than just a G2.
	With all that is happening, we have seen that the world economy has a chance of recovering. I would like to share some of the thoughts expressed by my right hon. Friend the Member for Haltemprice and Howden (David Davis) in what was an extremely good and quasi-philosophical speech. We have to accept that just hoping for recovery will not be sufficient, and that it is about time that we started to think about what sort of economy we really want. It must be open and global, yesfor the reasons I have stated, it is almost impossible for it not to be so. Certainly, the old capitalism based on the individual andto employ a word used by the hon. Member for Nottingham, Southavarice will not do. The public will not buy it: they want something more.
	We have to be slightly humble in this country and try to work out what others have tried to formulate in different waysa concept of social democracy and Christian democracy rolled together, where the reason for prosperity is that it means we can help each other and help people who are vulnerable. If that is the purpose of growth, profit and expansion, they are worth having and worth striving for. We want to rebuild the financial community, we want London to regain its status as a financial global centre, we want to build up business again to be profitable, and we want the banking community to start lending. That is not because we want to give people back their bonuses or give them the opportunity to make money and have bigger cars, but because it is the only way that we can have enough wealth to share with other people. That vision makes it absolutely crucial that we start to rebuild now. If we can provide that moral leadership, we can begin to influence not only people in this country but those in a wider sphere. That has been lacking in the debate so far. We have been agonising about this or that isolated issue, such as whether the automobile industry is going to recover. All those things are important, but they provide no context as to what we are trying to do.
	I hope that the Government and my own party will try to put our current circumstances in context. There is a desperate hope that the Government have got their growth forecast figures right. For goodness' sake, if they had made those forecasts as a public company, they would have been de-listed from the stock exchange and banned from ever being a director again. Somehow, we can get away with such forecasts in politics, but people cannot get away with it in business. We have to hope that growth returns, but if the public are to go through the pain of the almost inevitable increases in taxation as well as the impact of restraint in public expenditure over the next few years, they have to know what it is all forwhy we are trying to rebuild this society and this economy, what we are trying to do as part of a structure, and why we are trying to help people who are most vulnerable. It is because without doing that, we will have instability in society.
	Another vision is very important; it is, in a sense, a parallel vision to that of the hon. Member for Nottingham, South, but more general. It is about the importance of creating a society that is capable of solving some of the problems that we as individuals face, which means meeting the need to spend more money on science, research and innovation. That is partly because there is a competitive world economy, and if we do not do it in this country, other countries are doing it. President Obama has put an enormous amount of money into science and research in the US. His stimulus budget is about $22 billion. But what is required is not just sums of money but a vision. In the great depression, Roosevelt had that vision and launched a crusade to try to change the infrastructure, science and ecological environment of the south of the United States, with tremendously positive results, and galvanised people in the process. We have lost that in this country.
	Today's Budget picked off a few things that were honourable, admirable or whatever we want to call them, but they did not cohere. There was not the drive for ecological change for which the hon. Gentleman and I share a desire, with different emphases. There was no understanding that this is an opportunity to consider unleashing medical science to solve some of the big medical problems. The Cooksey report gives us guidelines as to how we might go about that. We could try to unlock some of the scientific problems that will determine the quality of life in this country.
	In my own report to my party's Front Benchers, I have proposed an innovative projects agency, which would start with 1 billion. It has some similarity with what the Government have started today, but it would be intended to take ideas beyond the point of discovery. We have huge admiration for our scientists who come up with brilliant ideas from basic research, but we are less good at pulling those ideas through into practical application. We cannot expect the private sector to do that by itself. There has to be collaboration in that grey area between discovery and proper application. The Government should be doing those things, and they should engage the public more in why they are being done. It is not about picking winners, it is about stimulating opportunities for the economy, which can then provide benefits for other people. I could go through a list of areas in which I would like that to take place. Last night I became the chairman of the all-party parliamentary and scientific committee, and I hope to make many more speeches in the House on these matters, so I shall not get down to specifics now.
	At a time of real depression, when there has been a Budget that contained extremely depressing figures, we need an uplift. The Minister of State, Department for Environment, Food and Rural Affairs, is smiling, and that by itself is an uplift for me, but I think that the public will probably be a bit more demanding. They want not just some context to the pain that they are going through nowbelieve you me, even in my constituency in Surrey there are plenty of people in painbut to know why they will have to bear the pain in the future. What are we really trying to do? What can we do to make society cohere so that it comes out of this stronger? Then they will understand why they might have to pay a top rate of tax of 50p in the pound. People are more generous-spirited if they know why something is being done. I did not get that from today's Budget, and I wish that I had, because it is in the national interest that we should.

Graham Brady: It is always a pleasure to listen to the right hon. Member for Birkenhead (Mr. Field). I would not have minded listening to him for a little longer, but he was commendably brief. I am grateful to him for that, and will try to do the same service for colleagues who are still hoping to participate in this debate.
	The right hon. Gentleman rightly said that one of the central points that needs to be addressed in future years, and perhaps even decades, is how we bring revenue towards expenditure. However, he was also honest enough to say that we urgently need to bring expenditure towards what can reasonably be borne by revenue, and the willingness and ability of the public to provide it. That is the central point that we need to consider in the context of this Budget.
	The right hon. Gentleman also spoke about the spectre of the vast and rapidly increasing levels of unemployment, as did a number of hon. Members in all parts of the House. That is an increasing concern for us all, in all our constituencies. I know that I am not alone in having seen unemployment in my constituency more than double in the past year, which is an alarming increase, albeit from a relatively low base. The announcement of 1.7 billion more to help deal with that problem is welcome, as long as it is used effectively. I have a real concern, however, that that might just go into the machinery of the new deal, and much of it could be wasted, just as so much has been wasted by using the revolving door method of taking people off unemployment benefit, thus reducing the apparent period of unemployment, then dumping them back on to it. I hope that the Government will make every effort to ensure that those resources are directed to the more effective schemes. Those are often the smaller, more local schemes run by voluntary organisations, of the kind that are all too often run much more effectively in other countries than they are here.
	There are, of course, measures in the Budget that we all welcome. I was pleased to hear the reference to the trade credit insurance measures, for example. I am sure that Members across the House will hear repeatedly from those in their constituencies and elsewhere about the very real problems that they are encountering because of the withdrawal of trade credit insurance, so I hope that the scheme will be effective. All too often over the past few months we have seen schemes brought forward with commendable motives, but which do not seem to have come into effect as quickly or as substantially as is needed.
	I want to say a few words about some of the details that should have been addressed in the Budget but have not been, before I make a wider point afterwards. I know that Ministers are engaged in live debates on these matters, but I want to highlight some of the things that are missing. Last year I spoke against the adoption of aviation duty, which I thought would be a bad tax that would have all sorts of negative effects. I was therefore delighted when, in November, the Government accepted that it would be a bad tax and would not work. However, they then responded by introducing some ad hoc measures relating to air passenger duty, which have problems of their own, especially in connection with the banding, and the fact that an unfair burden is being imposed on premium economy seats. I know that Ministers are dealing with those problemsor at least having discussions about themand I know that they are difficult to resolve. However, given that the Budget papers today tell us that the projected revenues from air passenger duty are reducing rather than rising, we have to wonder whether the Government themselves think that they have got that tax right.
	I raised the issue of fuel duty in the Budget debate last year. We have now seen a further increase. That will be painful for drivers, but massively painful for British hauliers, who face intense competition from continental Europe, where their competitors often pay much lower rates of duty. There was some recognition in the pre-Budget report of the problems relating to fuel duty, and it was said that the VAT cut would give a degree of compensation, although of course that will only be temporary. The Chancellor said earlier that he would keep an eye on oil prices, but we have heard from the hon. Member for Dundee, East (Stewart Hosie) that the future price of oil is looking worrying. To follow up on the point made by my hon. Friend the Member for Esher and Walton (Mr. Taylor), we still see no coherence in what the Government are trying to achieve through the fuel duty. Do they want to set a competitive level or are they concerned only with maximising revenue? Do they really recognise the necessity to ensure that our industry remains competitive?
	This illustrates the central contradiction in the Chancellor's approach. That contradiction was there before today's Budget, but it was also clearly displayed within it. It can be summed up by looking at the temporary VAT cut, which was introduced with the intention of reducing the severity of the downturn by about 0.5 per cent. of gross domestic product. There are questions about whether it was the most effective way of reducing tax in order to achieve that goal, but its introduction provided a wonderful moment of hope that perhaps, after years of the Government thinking that taxes on businesses and consumers could be increased without limit, without having any negative effect or inflicting pain on the economy, the Chancellor was going to cut taxes to benefit economic growth in the United Kingdom. However, the reduction is, of course, temporary, and due to be reversed at the end of the calendar yearand if we look at the wider set of proposals in the Budget, we see fiscal tightening over the years ahead: 1,000 of tax rises per family over the next two years.
	As the right hon. Member for Birkenhead said, the massive expansion of expenditure over a number of years has led to an unsustainable structural deficit, and what we have not seen in today's Budget is a credible path towards removing itnor have we been given a clear sense of how the Government will arrive at a sustainable level of spending in the future. We will all be fighting those battles for many years to come. I hope to be here, along with the right hon. Member for Birkenhead, to listen to future Budgets, which I hope will make the real progress that this one has failed to make.

Nigel Evans: It is always good to follow my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady)which is what my hon. Friend, in turn, said about the right hon. Member for Birkenhead (Mr. Field). They both made forceful and thoughtful speeches, showing great restraint in their timing; I shall do the same, as I know that at least one other Member wishes to contribute to the debate.
	First, I declare an interest as the proprietor of Evans News, a convenience store in Swansea that sells alcohol and cigarettes, for both of which this Budget has implications. Much has been said about the public debt that has been built up, and the enormous public debt that will be built up this year and nextthe greatest public debt that this country has ever seen.
	Government Members accuse us of just wanting to cut public spending, but that is simply not the case. We want to see public spending improved in some key areas. As many hon. Members will know, after getting a super-bug infection in a Swansea hospital, my mother died on 27 March. Almost 10,000 people died of super-bug infections in 2007, and no Member wants to see avoidable deaths continue at the present level in our hospitals. To put the number of hospital deaths from super-bugs into context, fewer than 3,000 people died from accidents on the roads. Money should be directed towards ensuring that hospital infections are completely eradicated; they seemed not to occur at all 20 years ago, yet all of a sudden there are massive numbers of deaths. I wanted to raise that issue on behalf of my mother and others, but I shall not concentrate on it any further today.
	I wished to raise a number of points, but given the time constraints, I shall deal with only a few of them. Some hon. Members have already spoken about the support needed by small and medium-sized enterprises. Business rates clearly affect them, and although the Government have announced that the misery to be inflicted on SMEs will be spread out over more years, the fact remains that they will still have to suffer the pain of paying higher business rates. Some SMEs are marginal businesses, and some make hardly any money, so we must ensure that we support them properly, and find ways of limiting the business rates that they have to pay.
	I also want to say something about credit insurance, and also something about the short-time working subsidy, which the Government need to consider further.
	One campaign that I have been running, which has clearly been a complete flop, is the Axe the Beer Tax campaign. We saw further increases in taxation on beer today, yet 40 pubs close every week, and thousands of people are losing their jobs every year. Pubs are small and medium-sized enterprises, and we all know the great work that those iconic British institutions play in our communities, not just in rural areas, where they are particularly important, but throughout the country. Pubs have dual uses, and the rate at which they are closing has not been helped by the continuation of the taxation that the Chancellor has announced today.
	I have received a letter from the Government. We asked about a differential tax rate for beer pulled at the pump as opposed to beer sold in bottles and cans from supermarkets, but I am told that we cannot have that, because the EU will not allow it. I implore Ministers to go to Brussels, sit with the Commission and work out what it takes to change that directive, or law, so that we can start to support the great British pub again. I will leave that suggestion with the Exchequer Secretary to the Treasury; I know she is aware of the issue.
	The next issue is fuel, which my hon. Friend the Member for Altrincham and Sale, West mentioned. Fuel is almost reaching 1 a litre againanother increase was announced in the Budget todayand 70p of that 1 goes in taxation. It is not as if we operate in splendid isolation from other countries. We do not. My hon. Friend also mentioned hauliers, who are put at a competitive disadvantage. For my constituents in rural areas, cars are not luxuries. In many cases, no rural public transport whatever is available to them, so they need their cars. I ask the Government to look at the impact that that increase is having on rural drivers and people who need a car to go to work. Government must not simply take motorists for granted and impose ever-increasing rates of taxation on them.
	One area that the Government might reconsider, where we might be able to make substantial savings, is that of some public sector salariesmy right hon. Friend the Member for Wokingham (Mr. Redwood) touched on this subject. MPs are pilloried in the papers for the amount that we earn, but my goodness, we are mere amateurs compared to some local authority chief executives and officers, and others who operate within the public sector.
	It has been recorded that more than 1,000 people who work in local authorities earn more than 100,000. At least 16 of them earn more than the Prime Minister, at more than 194,000. One earns more than 500,000. For goodness' sake, where is the pay restraint in local authorities? Pensioners and people living on limited and poor incomes are having to scrape together the money to pay their council tax, yet it is being siphoned off by an elite group who work for our local authorities. That must be looked at again. Such salaries must be capped. There has to be restraint in our local authorities.
	The other issue also involves the public sector, and there must be capping here, too. I serve on the Culture, Media and Sport Committee, and I always enjoy having Mark Thompson, the director-general of the BBC, give evidence before usbut he earns more than 800,000. I cannot believe that sort of moneyand of course he also has expenses on top of that. Again, that makes MPs look like complete amateurs, as such people are trousering lots of money in expenses and showing no restraint whatever.
	The head of Network Rail earns 1.25 million a year. Adam Crozier of Royal Mail earns almost 1.25 million. Andy Duncan at Channel 4 earns 1,211,000. Where is the pay restraint in the public sector? One lady has just taken over as chairman of Ofcom; she works less than five days a week, and earns more than 200,000 a year.  [Interruption.] I am informed that she works a three-day week. We know that there are quango heads who earn substantial sums for part-time work. Quite frankly, that shames us all, because we have lost the plot, and lost our grip.
	A lot of non-jobs are advertised in  The Guardian and local papers up and down the country. If they did not exist, nobody would miss them, but my goodness, we would all benefit from saving the money that we are throwing at some of those non-jobs.
	I have been a Member of Parliament for nearly 17 years, and I have to say that this Budget, as a whole, is the grimmest Budget, for the grimmest conditions, that I have ever seen. We have had a bankrupt Budget from a bankrupt Government who now administer a bankrupt country. Each time the Chancellor said that he wanted to do something to help the country, I thought that he was going to announce his resignation, but sadly, he did not. The best thing that he and the rest of this Government could do would be to go to the country, and ask for the public's verdict on how they have conducted the country's affairs.

Willie Rennie: I am not sure whether it is the immediate effect of the Budget or that the House authorities have decided to turn up the air conditioning, but I have been freezing for three and a half hours. I am glad that I am now able to exercise a littleto get moving, and start the blood circulating around my body.
	I do not know whether I am alone in this, but I do not like to think about the stars and the planets. It tends to hurt my head if I think about things that are beyond my comprehension, and I think that that was the Chancellor's general approach today. He preferred to talk about the minutiae. He spurted out figures, one after another. In one section of his speech, when he was talking about banks and percentages, we heard about percentages of 59, 68, 74, 78 and 79, and sums of 175 billion and 173 billion. He then mumbled some generalisations about the future, but he avoided talking about the big picture.
	I think that it was the hon. Member for Esher and Walton (Mr. Taylor) who asked what was the vision for the Budget, and he was spot on. If people are to buy into the pain that we will experience, they need to know what is the promisethe pledgefor the future, but there was nothing for them to grab other than a series of individual announcements. I welcomed some of them: the announcement on carbon capture, about which I shall say more shortly, was excellent. However, there was no big vision. There was nothing for people to grab hold of and consider to be worth going through pain for.
	One of the biggest financial stimulialthough I am not sure whether the Chancellor classed it as a financial stimuluswas for Jobcentre Plus. While I think it worthy to invest more money to retrain and support people, I do not recall the Chancellor tramping around the world trying to secure the support of other countries for that sort of financial stimulus. I am not sure whether we have been given the Budget that we have been promised over the past few weeks. I believe that this is a Budget of missed opportunities.
	The big debate on which the Prime Minister likes to try to make us focus deals with whether we are to have the do-nothing approach of the Tories or the all-action approach of the Labour party. It would be nice if it were as simple as that, but in the case of a financial stimulus it is what you do that counts. I want to try to create something new out of this crisis. I do not want to patch up the old; I want to create something of which we can be proud. The hon. Member for Nottingham, South (Alan Simpson) made some good points when he described, very knowledgeably, the experiences of South Korea. I think that we should try to build something of that kind.
	I am particularly disappointed because a manufacturer in my constituency is having to lay people off because the train maker Bombardier and the bus maker Alexander in Falkirk have laid people off, having not secured the orders that were promised in the general furore following the initial financial crisis. I think that the fact that people who were employed to manufacture buses and trains are being laid off at a time when we are trying to create a new environmental economy is an indication that the Government may have got it wrong.
	In Dunfermline, the break-up of the Dunfermline building society has been a traumatic experience over the past two weeks. I am pleased that the Scottish Affairs Committee has agreed to conduct an inquiry into the breaking up of Scotland's largest mutual society. I want the Committee to take evidence from a range of people, not just the directors, the management and the Financial Services Authority. I think that the Prime Minister should consider giving evidence. He should do so because when he was Chancellor he did not impose the appropriate financial regulatory machinery that would have prevented these catastrophic mistakes from being made within the society. Although it is quite a small society in UK terms, it is a symbolic institution and it is right on his doorstep. He will feel pressure locally, therefore, and he might want to seek the opportunity to explain what his role was in the demise of the society.
	There are some related issues. I was hoping that we might get some more radical reform of the Financial Services Compensation Scheme, because the balance between risk and value in how the levy is allocated is currently completely out of kilter. There is not the appropriate recognition of institutions that are relatively safe in their outlook, and they are therefore penalised in the same way as the reckless. I was hoping a reform would be announced today, but, alas, that did not happen.
	The second issue is the capital requirement. Lord Turner has advocated a flexible capital requirement for institutions, which should lend from 7 per cent. in the good times to 4 per cent. in the more difficult times. Unfortunately, the Financial Services Authority currently imposes a requirement of 8 per cent. across the board, which penalises a lot of organisations and institutions that are doing a very good job in very trying circumstances.
	Since the beginning of the year, I have visited about 100 businesses in my constituency. Going around them is a very interesting experience, because we often think they are one big homogenous mass and that everybody is suffering right across the board, but that is not true. Some businesses are actually doing quite well. They are smart businesses that are adapting to the circumstances. They might be operating in the make do areafixing fridges or cars, perhaps. They are doing quite well; they are recruiting people and they are quite optimistic. I must add, however, that there were a lot of empty units as I travelled around the industrial estates, so there were others who were not able to speak for themselves. Nevertheless, we should acknowledge that despite the trying circumstances some businesses are doing quite well, and we should not kid ourselves that they are one big homogenous mass. We should reflect on that when devising policy, because we need to have appropriate mechanisms in place to support the businesses that are doing welldespite the best efforts of the Government, I would add.
	Bank lending is an issue. The Red Book contains some figures about how much the banks are committed to lending over the next year: 25 billion for RBS, 14 billion for Lloyds, and 5 billion for Northern Rockand I am sure there are others. The trouble is, however, that it is all very well committing, but the conditions and the commercial requirements that are in place are crucial. We need to have arrangements that recognise valuable businesses.
	Lots of people have come to meI am sure this has happened to other Members, toowho are incredibly frustrated that they are unable to squeeze any money out of the banks and other institutions. They have good business prospects, they employ quality people and they know how to run businesses, but they still cannot get the money out. It is not that they get a flat rejection; what they get are delays and barriersthey might be asked to return to their bank with yet another requirementand eventually they just give up.
	I met someone on Saturday who was incredibly frustrated. He was a smart guy with a great business opportunity, but he is not managing to go ahead with it simply because the banks were not prepared to lend him the money he needed. This is partly to do with the skills of the people who work in the banks. In the past they were salesmen grabbing every opportunity they possibly could, but now they are being told to hold back, and they think, I'm not going to be the first person to say to my manager that I want to make a slightly more risky loan than others might recommend even though I think it's a great opportunity. We need to ensure that we have quality people within these institutions who can assess whether a business is a good opportunity.

Mark Durkan: I have talked to people involved in banking in my own area of Northern Ireland and they have confessed that in the past 10 to 15 years banks were lending junkies. Yet now, as the hon. Gentleman acknowledges, we are relying on the very pushers to manage their way through this problem. We have recapitalised the bankswe have put the money in and helped to stabilise themand are simply relying on them to conduct things, yet, as he says, we hear from businesses that they are not getting the credit. Does he agree that this House perhaps needs to have more oversight of banking performance and practices in such circumstances? We cannot leave it to the Treasury Committee to try to pursue and examine these things, in addition to the huge amount of other things that it is having to deal with in this situation. Given the scale of intervention and support that there has been from the taxpayer, perhaps we need to see how the House can provide a bit more oversight and put better manners on some of the banks.

Willie Rennie: That is absolutely right, although I am not sure that we are the best people to run the banks and I fear that in the current circumstances we may go from one extreme to the other. I think that the banks have gone from being lending junkies to not lending anything at all because they have clamped down on everything out of fear that they will be the first to get it wrong. We should have more oversight, but the banks should look at the quality of the people working for themI am sure that they are doing that. We do not need the pushers any more; we need the assessors, who can spot value and spot the winners. If we do not get that area right, we will end up suffering even more.
	The Government should be putting much more of a social economic requirement on the banks. It should no longer be the case that we are just trying to look after the taxpayers, which seems to be the only requirement in the Red Bookthe aim is to try to get the money back into the Government's coffers as quickly as possible. A measure needs to be in place to ensure that we direct the banks more to have a social economic requirement. We own most of them now so they should have such a requirement in place.
	I wish to discuss carbon capture in the last couple of minutes available; I was very enthusiastic about today's decision, because it presents a great opportunity for one of the biggest coal-fired power stations in the UKLongannet power station, in my constituency. I understand that the hon. Member for Dundee, East (Stewart Hosie), who is not in his place, is sceptical about whether the Government will go ahead with the proposals, but I think that they will go ahead; I shall be encouraging them every step of the way as I want it to be done as quickly as possible. If we can get carbon capture up and running effectively, we will make a significant impact on climate change.
	Longannet power station has been the powerhouse for Scotland for decades, but it could now become the green powerhouse for Scotland. I strongly believe that we could create a centre of excellence around it. I know that it has to go through a competition process and it is not guaranteed to secure a scheme, but the Government did talk of up to four, and there are only three on the shortlist, so there is a possibility that it might get one. I was delighted to hear that that is being introduced.
	On more of a disappointed note, the final thing that I wish to mention is the Forth road bridge, which, again, is local to my constituency. The cables on it are breaking and there is a recognition that it needs to be replaced, but that will cost about 1.7 billion to 2.3 billion. The Scottish Executive have singularly failed to raise a single penny to fund the new crossing and are now going cap in hand to Westminster. I appeal to the Treasury to come up with the necessary funding to ensure that we are able to build the new bridge, because if we are not, that major artery will be lost not only to the east coast of Scotland, but to the whole of Scotland.
	 Ordered, That the debate be now adjourned. (Helen Goodman.)
	 Debate to be resumed tomorrow.

Sri Lanka

Andrew MacKinlay: The purpose of this debate is to draw the House's attention to the abysmal state of debt collection methodology and the spirit governing it in the UK and the wholly inadequate safeguards for good and innocent people who are endeavouring to pay debt or who dispute it. It is a matter of fact that the debt collection industry relies on a combination of fear and ignorance to make a profit, and that is despicable.
	In 2006, the Office of Fair Trading and related agencies received some 5,700 complaints. In 2007, that figure had reached 8,000 and more than 11,000 complaints had been received by August 2008. That is a total of 25,000 complaints in three years, but the Office of Fair Trading took formal actionsuch as licence revocation or suspension, or the imposition of other requirements on debt collection agenciesin only four cases. I shall illustrate tonight that that is a wholly inadequate response and that Parliament has failed to stiffen the sinews of the OFT and give it legislative powers and duties to protect and promote the interests of innocent people.
	By coincidence, in the past 24 hours, the OFT has taken action against an outfit called Mackenzie Hall. Some of its procedures were found to breach the OFT's guidelines. Ray Watson, the OFT director of consumer credit, said:
	Persisting with debt collection activity when debts are in dispute can give rise to significant consumer detriment, particularly where vulnerable consumers are involved.
	But that is a pathetic response, because similar abuse happens every day in countless agencies. All we see is limp and late action by the OFT.
	How did I come to seek this debate? There were several reasons and I shall share them with the House. First, a constituent wrote to me in March because he had received a menacing letter from the communications company 3, which claimed that he owed it more than 800. The letter requested that he
	treat this matter with the utmost urgency. Failure to respond within 20 days of the date of this notice will result in our chosen specialist debt purchasing partner Lowell Portfolio 1 Ltd directly contacting you to arrange repayment of the outstanding balance.
	This menacing letter totally bewildered my constituent, who had never had knowledge of 3, or dealings with it. As his Member of Parliament, I wrote to the company on 26 March. I asked what all that was about and said that my constituent was bewildered and anxious, but I have not received a replyexcept for the fact that, by another amazing coincidence, there was a phone call to my office just two hours before I commenced this Adjournment debate, asking for more information. That gives an idea of the sort of cavaliers and cowboys that we are dealing with, among both the companies themselves and their agents. Such behaviour has got to stop.
	Secondly, in February I happened to listen to the very fine BBC programme. You and Yours, on which I think that the Minister subsequently appeared. The whole programme was devoted to the menacing attempts by debt collection and communications companies, as well as banking and financial institutions and others, to extract money from people. Some of the people involved are wholly innocent and do not have any debt, while others either dispute the debt or are willing to come to an arrangement about its repayment. The programme found that the companies had responded with bureaucratic inertia or an inability to communicate, or with the malevolent and menacing actions that I have described.
	Last Sunday week,  The Sunday Times carried a very forensic and skilful article by its Insight team, in which they described the conduct of the Lloyds banking group's debt collection department. Workers in the so-called recovery department were secretly tape recorded, and the tapes revealed that it was suggested that they should put the frighteners on and f... customers who owed the bank money. Bank staff were incentivised by bonuses and, contrary to the code of practice of the Office of Fair Trading, claimed to represent firms of solicitors.
	The bank's staff are poorly paid, and have every incentive to maximise the extraction of money from the people whom they telephone. Inevitably, that leads to breaking the OFT code and often to a menacing attitude. One lady, a nurse, told  The Sunday Times that she had been called six times a day at work, something that again breaches the OFT guidelines. Moreover, it was reported that the people who train new staff and induct them into the recovery unit persuaded them to remind home owners about repossession, and to tell them that they could be credit blacklisted.

Andrew MacKinlay: No. I hope that the hon. Gentleman will forgive me, but there is not enough time. Perhaps he will be able to intervene in a minute.
	Although recovery department staff were Lloyds's employees, they tried to imply that they were part of a firm of solicitors by the name of Sechiari Clark and Mitchell. That, of course, was quite false. I hope that the Minister will confirm that he has read the article in  The Sunday Times , as I have been able to give only a summary of it in the few minutes available this evening.
	The programme You and Yours showed the extent, scale and gravity of the callous and dilatory nature of debt collection in this country. I know that the Minister listened to the programme, and I hope that he has been able to consider the follow-up programmes. For instance, one lady described how the Bank of Scotland had constantly bombarded her and her terminally ill husband with insensitive automated phone calls. Another person, Marian Parks, described how the same bank's actions had impacted on her father, John Leather, and set out all the problems that arose as a result. To their credit, her family was so incensed that they entered into litigation before Mr. Recorder Grice at the Truro county court, where the matter was determined on 23, 24 and 25 February. It is interesting that Mr. Recorder Grice described the so-called Triad system, which involves constant automated telephone calls to alleged debtors, as
	a juggernaut which cannot be stopped very easily.
	He went on to say that
	the Bank of Scotland comes at you from all sides,
	and that the Bank of Scotland's explanation
	would be farcical had it not been so stressful.
	He described how use of the Triad automated telephone system went on and on. He said that there were certainly grounds for criticism of the Bank of Scotland and its inflexible system, adding:
	what I find really disturbing is the complete absence of a personal safety net...I think the Bank of Scotland should be subject to significant criticism.
	Also in the bundle of documents presented to the court was the advanced call skill read-ahead package for staff who work in the bank's recovery system. It tells them to use the following threats:
	keep your car...protect your credit rating...be able to get future credit...prevent legal action.
	It suggests borrowing from...relatives and asking:
	Is your husband/wife employed?
	and so on. All that, of course, is against the spirit of the OFT code and the banking code.
	The radio programme to which I referred also demonstrated the courage of a Mr. John Cooper, who took on the communications company 3, which I have already mentioned. He had purchased, some time ago, phones for his daughters, but they did not work in his area. He cancelled his direct debit. It would appear that that alleged debt was sold to a company called HFO Services, which persisted, menacingly, in trying to get him to cough up some money, to the extent that his daughter was fearful that its representatives would seize property in the home. I heard on the radioI think that the Minister will have done so, tooa recording of a telephone conversation in which a representative from HFO Services, speaking from a call centre in Asia, said:
	Despite leaving several messages on your answer machine and despite trying to get in touch with you, you have failed to respond back. Now if I don't receive your call today I would go ahead and forward the
	there followed an indistinct word
	to Northampton County Court so that there would be a county court judgement issued against you. And it might be also the court appointed bailiffs. If you want to save yourself some legal hassles please call me back.
	That is completely and utterly contrary to the codes. Of course, the company was exposed by the BBC. In a feeble statement, the outfit called HFO Services said:
	HFO views any alleged breach of the OFT guidelines or applicable legislation as a matter of the utmost seriousness.
	It would say that, wouldn't it? That does not impress me. It tried to give an excuse and pretended that it would have an investigation. I have to say that the director of that company knows what is going on in his call centre. If he does not, he should, and anyway, he is culpable.
	I have referred to the guidelines, and I will place a copy in the Library. They are self-explanatory and common sense, but they are wholly inadequate. They need to be beefed-up. They were last reviewed in 2003. They do not take into account the automated dialling menacing system, through which the menacing goes on and on. Both the guidelines and the judgment of the recorder to whom I referred need the attention of the House. The brave people who took the matter to court suffered constant harassment by means of automated telephone calls and so on, but found that that did not constitute harassment in law. We need a lower threshold for the term harassment and/or to find an alternative offence to protect and promote the interests of vulnerable people.
	We should also enable the OFT to order a stop notice that suspends debt collection activities if it becomes aware of a case in which, prima facie, there is a breach of guidelines and/or clearly a dispute about whether a debt exists. That is what is required.
	Since I appeared on the programme You and Yours, I have been overwhelmed by heart-rending cases. The MBNA bank has been pressing people. Bank after bank, institution after institution have been overbearing in the way in which they have approached decent people. E.ON used Advantis Credit Ltd in a disgraceful episode in terms of the manner in which its staff approached people who were alleged debtors.
	I shall gladly give way briefly to the hon. Member for Manchester, Withington (Mr. Leech), who has been very helpful.

Gareth Thomas: Let me turn to the scale of the action that the OFT has already taken, because I suspect that my hon. Friend is not aware of just how much activity has taken place. I should add that the OFT's debt collection guidance covers such practices. In particular, it says that putting undue pressure on debtors is considered to be oppressive, while ignoring claims that a debt is disputed would constitute unfair practice by the debt collector.
	Debts are often disputed by those being pursued for them, and, in such cases, the industry's immediate response should be to suspend debt collection, and the case should be thoroughly looked into. Indeed, if that had only happened in the case of Mrs. Brazier, she might still be with her family today. Let me again be clear to the House and to such companies: if a licensed debt collection agency or a creditor persistently fails to comply with the OFT's debt collection guidance, or if there is evidence to substantiate claims that the licence holder has engaged in unfair business practices, the OFT can ultimately revoke its licence, effectively putting the trader out of business. Any persistent failure by a creditor to provide accurate information could also reflect on that business's fitness to continue to hold a licence.
	As I have mentioned, since April 2008, the OFT has had a strengthened role, requiring the provision of more information from businesses engaged in high-risk credit activities, such as debt collection, when they apply for a licence or to renew an existing licence. That is to ensure that business will be carried out to a reasonable standard. In some cases, the OFT will commission on-site visits and reports from trading standards officers to help in its judgment about whether at the heart of a business's processes and procedureswhat it actually doesthere are genuinely good standards: for example, whether adequate staff training procedures are in place to ensure that a firm's legal responsibilities are properly understood at every level of the organisation.
	I should tell the House the scale of the action that the OFT has already taken. It has already initiated a total of 186 so-called warning and advisory letters, which have been sent to businesses in the sector. In addition, a further 22 formal actions have been taken, resulting in, for example, seven licences being surrendered, four licences being refused or removed, four businesses being given significant undertakings and four cases in which requirements have been imposed. I recognise the statistic cited by my hon. Friend about OFT action, but I hope that he will recognise that far broader enforcement activity has taken place.
	Let me give specific examples of recent informal and formal action. In April 2008, in response to an increase in complaints about debt collection practices, the OFT wrote to 13 companiesincluding debt collection and trace agencies, debt purchase businesses and financial institutionswarning them to take steps to improve their debt collection practices. Among the more serious practices identified from the complaints were the chasing of consumers for payment of debts that they did not owe, partly because of over-reliance on the poor data provided by creditors and poor or inappropriate tracing activities; failing to properly investigate disputed debts; and employing an over-aggressive or oppressive approach to recovering debts, including, on occasion, refusing to deal with or bypassing third-party representatives such as citizens advice bureaux.
	The 13 companies were required to review their policies and procedures for tracing debtors; that included keeping client information up to date and maintaining its accuracy. The OFT was satisfied with the responses of four of the companies and the steps that they had taken to ensure compliance, but it will continue to monitor complaint levels. It is still in the process of assessing or seeking information from the remaining nine companies. That could include carrying out on-site competence visits or seeking further information using its powers under the Consumer Credit Act.
	At least one major debt collection company has updated its automated systems to reduce the likelihood of collection activity continuing when the consumer has disputed the debt. The OFT will be writing to creditor trade bodies reminding them of their responsibility to ensure that data used for debt collection are accurate and asking them to take action to improve the data that they pass on to debt collectors.
	My next example involves the requirements imposed on 1st Credit Ltd. After an investigation, it was found that some of its business processes and procedures failed to meet satisfactory standards. As a result, that company and its associated companies must refrain from issuing statutory demands warning of bankruptcy when it is unlikely that proceedings will be initiated; not discuss legal action with consumers, unless it is likely that such action will genuinely be taken; ensure that sensitive cases involving vulnerable individualsfor example, those with mental health problemsare dealt with appropriately; and ensure that all matters of concern raised with them by the free advice sector and other third parties are dealt with appropriately.
	A considerable amount of activity to raise standards in the industry has been initiated. However, I recognise my hon. Friend's central point: more action is needed. I have been working with the Credit Services Association, the main trade association in the sector, to get it to remind its members of their obligations to have the highest standards. The association has responded in a positive way. In particular, it has agreed to my request that it should offer debtors who contact a debt advice agency for help in sorting their finances a 30-day breathing space to get their affairs in order. That follows our success in getting the credit card sector to agree a breathing space for its customers who approach a debt advice agency for first-time help. I am also calling in representatives of the utility sector for similar discussions about how they can best help customers having problems with their debts. My hon. Friend will have seen the announcement by my right hon. Friend the Prime Minister, confirmed again today by the Chancellor of the Exchequer, that a White Paper on consumer matters is being prepared, and that will touch on this subject.
	This sector and industry are under the spotlight. Ministers, the OFT, Members of this House, the media and our constituents are all watching closely the activity of businesses in the sector. Considerable work has already been done to challenge poor standards and there has been progress, but I recognise that there is more work to do.
	 Question put and agreed to.
	 House adjourned.